Alcoa - Final Thoughts

Ticker Symbol: AA

Final Thoughts

Alcoa may be facing stalwart headwinds in the wake of March and April's steadfast broad-market rally. The bank-led valuation rally propped up commodity stocks that had been reflecting massive deleveraging in hard asset classes. Lower raw material prices has forced Alcoa to clamp down on production which will be reflected in successive earnings.

Plant closures contributed to 13% drop in revenues quarter-over-quarter while depressed demand continues to plague aluminum producers. Flat-rolled demand was relatively strong, falling 20% last quarter compared with a 26% drop in average primary aluminum products.

In general, Aluminum producers cannot be profitable if aluminum costs less than $1 per pound. With aluminum currently trading at about 70% that breakeven point, expect producers like Alcoa to face an uphill battle. Alcoa is burning through cash rapidly, evidenced by their $740 million negative free cash flow.

Article Index

• Alcoa Home
• Alcoa Historicals
• Alcoa News
• Alcoa Charts
• Alcoa Final Thoughts