Alcoa (AA) Could Jump in 2012 on Production Cuts

Aluminum production is being cut back in 2012 as prices continue to weaken in the weak global economy. That could be beneficial to Alcoa (NYSE:AA) and other companies with significant exposure to aluminum.

That, however, won't help Alcoa in its latest quarter, which is expected to announce a loss after the market closes. Consensus is for the company to report a 2 cents a share loss, with Citigroup (NYSE:C) going against consensus, seeing it being much worse for the aluminum producer, saying they're looking for a loss of 7 cents a share for the quarter.

If production cuts are in align with assertions in 2012, it could be beneficial to Alcoa, as it could help boost aluminum prices because of lower demand.

Alcoa was trading at $9.33, up $0.17, or 1.86 percent, as of 12:03 PM EST.

Alcoa (AA) Jumps on Davenport Upgrade

Shares of Alcoa (NYSE:AA) are trading up today after Davenport Securities upgraded its rating on the company from "Neutral" to "Buy." They have a price target of $18 on the aluminum producer.

According to analyst Lloyd O'Carroll, the aluminum giant has "more upside than downside for aluminum prices (even with all the negative sentiment in the financial markets)," which should boost the stock. He also noted that there was more to Alcoa's story than just aluminum prices, as the Street has been mostly ignoring Alcoa's three other segments, Alumina, Flat Rolled Products, and Engineering Products & Solutions, which he thinks "have been improving and changing for the better."

O'Carroll added that he sees the long-term prospects for Alcoa being solid, citing the continual focus on cutting costs while aluminum demand in the years ahead appearing to have sustainable growth, concluding Alcoa being "suitable for long-term value investors."

Alcoa was trading at $11.37, gaining $0.16, or 1.43 percent, as of 1:33 PM EDT.

Alcoa (AA) Expected to Beat Consensus Again

Alcoa (NYSE:AA) unofficially launches the earnings season after the market closes today, and is expected to beat consensus for the fifth quarter in a row, possibly doubling over the previous quarter.

Profit in the second quarter, according to a FactSet Research survey, should come in at 34 cents a share.

Aerospace and transportation are the primary movers of the metal, with China being the major source of demand for aluminum.

On the London Metal Exchange, aluminum prices have surged 24 percent in the quarter, with global demand projected to climb by 12 percent in 2011, says to Alcoa CEO Klaus Kleinfeld, and could double by the end of the decade.

Aluminum production by Alcoa in the first quarter reached 889,000 tons, and should surpass that in the current quarter.

Even with a good report the company could be challenged, along with many others, on concerns over the continuing sovereign debt disaster in Europe, China's growth rate, and the anemic American economy.

Alcoa was trading at $15.92, falling $0.46, or 2.81 percent, as of 10:07 AM EDT.

Diversified Miners (RIO) (TCK) (VALE) (BHP) Close Down as Base Metals Drop

Base metals dropped in Monday trading putting pressure on diversified mining giants Rio Tinto (NYSE:RIO), BHP Billiton (NYSE:BHP), Vale SA (NYSE:VALE) and Teck Resources, (NYSE:TCK), which all closed down.

Three-month copper on the London Metal Exchange dropped to $9,207 a ton, its lowest since March 17. It closed at $9,225 a ton from Friday's close at $9,450.

Stocks of copper in LME warehouses last rose 1,350 tons to 451,775 tons, their highest since June 2010.

Also weighing on metals, the U.S. dollar was stronger against a basket of major currencies, weakening metals demand from non-U.S. investors. European equities were down on increased talk that Greece will be forced to restructure its debt and uncertainty over a bailout for Portugal which dampened risk appetite.

Aluminium closed $2,674 from $2,690 a ton.

Zinc ended at $2,325 from $2,398 a ton. Stocks of the metal rose 50 tons to a seven-year high of 764,300 tons.

Battery material lead was down close to five percent to its lowest in over a month at $2,520 a ton. It closed at $2,528 from $2,651 a ton, while tin finished at $32,350 from $33,100 a ton and nickel ended at $25,500 a ton from $26,155.

Platinum was lower by 0.2 percent at $1,779.99 an ounce, while palladium fell 3.3 percent to $735.22.

BHP closed Monday at $97.98, falling $1.82, or 1.82 percent. Rio Tinto closed at $69.09, down $1.82, or 2.57 percent. Teck Resources ended the session at $50.68, losing $1.26, or 2.43 percent. Vale closed at $32.05, dropping $0.73, or 2.23 percent.

Alcoa (AA) Would Benefit from Chinese Suspension of New Smelters

An article in the Shanghai Daily, citing the China Nonferrous Metals Industry Association, asserts the Chinese government may take action to halt the overcapacity in the aluminum industry by no longer approving of new smelters, a move that could help alumina giant Alcoa (NYSE:AA).

The report said China produced a little under 18 million tons of aluminum last year, which would represent approximately 85 percent of total capacity. Conflicting reports place the number close to about 60 percent. Whatever percentage is more accurate, it does represent overcapacity.

If smelters are no longer approved in China at this time, it would strengthen spot aluminum prices because of lower production in a annual market growth of 15 to 20 percent. That would boost margins and earnings assuming input costs don't rise too much.

Alcoa closed Wednesday at $16.55, falling $0.15, or 0.90 percent.

Alcoa (NYSE:AA): An Earnings Preview

The faltering economy and soaring commodity prices are finally cutting into unjustified optimism in the market, taking something away from the unofficial start of the earnings seasons with Alcoa's (NYSE:AA) earnings report on Monday.

More than likely Alcoa will have a super quarter to report, but things have changed so much that the only element investors are seemingly, and rightfully interested in is guidance.

The biggest concern going forward is whether or not Alcoa will be able to take advantage of rising aluminum prices when at the same time raw-materials inputs and transportation costs are rising. That's not a guarantee any longer.

So while demand has been and will be stronger, margins and earnings could come under extreme pressure, negating the value rising prices and increased demand, which under normal economic conditions would be a big boon for Alcoa and the aluminum industry.

So the projected 12 percent boost in aluminum consumption has yet to be proven to be a positive for Alcoa. The one good thing is they were able to cut back on costs during the recession, resulting in a leaner company, which should help it going forward.

Even with Alcoa's 12 percent projection, that's no longer a guarantee, as rising gas prices and fuel costs in the airline and automotive industries, which are among the company's major customers, are undergoing extreme stress at this time, with no clue as to how long it'll last.

That includes the parts shortages because of the earthquake in Japan as well as declining numbers of passengers on airlines, which could have an effect on capex. That could be bad news for Alcoa.

The major problem Alcoa faces is just about every key market it serves is back to undergoing stress, including construction and the industries already named above. Consumer spending appears to be stronger, but that could, and probably will, slow down as gas prices go up or remain level.

All this has been said to reiterate the fact that the performance of Alcoa last quarter has already lost its thunder, and the expected earnings of 27 cents a share and $6.16 billion in sales, even if the company exceeds it, which they could, will be a bittersweet victory for it.

The bottom line for Alcoa is what appeared to be a surety of terrific growth and earnings just a short time ago for the next couple of years, has suddenly and quickly changed into a complete uncertainty.

It'll be interesting and vital to hear what the company says about the impact of events and costs on those sectors of the market it serves on guidance.

Alcoa was trading at $17.82, falling $0.30, or 1.66 percent, as of 2:58 PM EDT.

Alcoa (AA) Soars to 52-Week High

Shares of Alcoa (NYSE:AA) surged to 52-week highs on Tuesday, as the company closes in on its earnings report day, which is considered the kick-off of the earnings season.

Anticipation has been building as the company took time during the worst parts of the recession to lower costs, and now from that strong position the price of aluminum has been rising, along with aluminum demand, creating a growing expectation that the company will have a good quarterly report and guidance.

That also means margins and earnings should have risen significantly, as well as revenue in the quarter.

Once concern would be if there are any consequences going forward from the earthquake in Japan in regard to markets Alcoa serves, such as with auto makers. That will have no effect on the latest quarter, but it possibly could on guidance.

Alcoa closed Tuesday at $18.05, gaining $0.49, or 2.79 percent.

Monsanto (MON) (KBH) (GBX) (RAD) Reporting Earnings This Week

Monsanto (NYSE:MON), KB Home (NYSE:KBH), Greenbrier (NYSE:GBX) and RiteAid (RAD) are all reporting earnings this week, with Alcoa (NYSE:AA) set to report earnings on April 11, in what some consider the official kicking off of the earnings reporting season.

These companies will give a snapshot of what to expect going forward, as they represent agriculture, new home starts, freight transportation and retail, although RiteAid may or may not be a legitimate bellwether in the regard because of its struggles and volatility. They probably won't be a good representative of retail and pharmacies because of that.

As for Alcoa, its expected to kick off with some good numbers, as the company has done a decent job of cutting costs and has been riding rising aluminum demand and prices.

What will be important for all of these companies will be in guidance. Recent disruptions in Japan could have an impact on the companies, with Alcoa, KB Home and Greenbrier especially, based on supplies and whether not that could affect home costs and freight delivery, as well as the obvious issues related to Alcoa and its supply of aluminum to the auto industry.

Alcoa (AA) Quarterly Earnings Picking Up Over 2010

With little to do during the recession but focus on improving its cost structure, Alcoa (NYSE:AA) has positioned itself to benefit when a real recovery comes along, and even if we're in a temporary one, the aluminum producer should report a solid quarter as the price of aluminum has jumped during that time.

Credit Agricole Securities analyst David Lipschitz, said, “As aluminum prices are going higher, Alcoa is also rising. Earnings have picked up significantly from higher aluminum prices from a year ago.”

While Alcoa still has some work to work on its costs, the improvement will be enough, along with the higher price of aluminum, to provide solid results.

Industries that have helped it run recently include the auto and aerospace industries, although how they perform in the next quarter could be impacted from the consequences in the auto industry from parts shortage coming from the impact of the earthquake in Japan.

Alcoa closed Thursday at $17.66, gaining $0.02, or 0.11 percent. The company is trading near the top of its 52-week range.

Alcoa (AA) Rebounds, Leads Dow

Although struggling since highs hit in February, Alcoa (NYSE:AA) appears to be back on track again, thanks largely to the expected boost in aluminum demand from the Japan earthquake and tsunami as the country prepares to rebuild.

Alcoa let the Dow up on Wednesday, as some commodity prices continue to rise in anticipation of the orders mining companies will get.

Commodities like copper, iron ore, steel and aluminum are expected to generate strong orders in the short and long term.

Alcoa closed Wednesday at $16.95, gaining $0.50, or 3.04 percent.

Century Aluminum (NASDAQ:CENX) Turns it Around in Fourth Quarter

Century Aluminum (NASDAQ:CENX) generated a profit in the fourth quarter, turning things around after a lost in the same quarter last year.

Net income surged to $59.94 million, or $0.64 a share, far above the $24.35 million, or $0.28 a share the company lost last year in the same quarter. Analysts had been looking for earnings of $0.22 a share.

Revenue for the quarter increased to $316.85 million, soaring above the $256.81 million last year. Analysts estimated revenue of $306.13 million.

Net profit was $65.3 million, or 64 cents a share, against a loss of $24.4 million, or 28 cents a share, in the same quarter of 2009

Increased demand and higher aluminum prices boosted the results for the company.

Century Aluminum closed Tuesday at $15.45, dropping $0.38, or 2.40 percent.

Alcoa (NYSE:AA) PT Boosted by Goldman (NYSE:GS)

Alcoa (NYSE:AA) had their price target raised by Goldman Sachs (NYSE:GS), while introducing their EPS estimate for 2013 of $1.40 a share.

Goldman also noted that per Alcoa's Saudi Arabia JV Ma'adan, they'll be coming online with their flat rolled mill and smelter sometime in 2013.

Alcoa has gotten a boost from expectations aluminum demand and prices will continue to move up in 2011, as the share price recovers from a long lull.

Alcoa closed Thursday at $16.47, down $0.13, or 0.78 percent. Goldman raised their price target on them from $16 to $17.

Alcoa (NYSE:AA) Still Has More Upside

Alcoa (NYSE:AA) appears to be in a strong place to grow, even after their 40 percent gain over the last four months.

One of the positive factors in the company was the strategy by management during the worst part of the recession to focus on cutting costs to the bone, positioning themselves for the time when a recovery would come.

In the short term (2011), Alcoa may still be under some pressure, but when you extend it out through 2013, they look like they could be a strong stock to be holding.

Now that costs are under control and pared, Alcoa isn't that hard to understand or measure. You have demand for aluminum, aluminum prices, and for the most part China. Look at those three factors, and you have the Alcoa story.

The good news for Alcoa and other aluminum producers is China has encouraged the cutting back of aluminum production domestically because of energy factors. That leaves a hole to be filled, which should benefit Alcoa going forward.

If they are also able to get a bigger foot in the aluminum ETF market, which is a completely new one, Alcoa has a strong position for a nice run over the next several years.

Questions on how fairly the company is priced are of course legitimate, but again, that depends on the range of time you're measuring them by.

If several years, Alcoa looks strong, if only for 2011, you many want to hold off, although they could get some more upward movement before the end of the year.

Alcoa was trading at $16.43, up $0.64, or 4.05 percent, as of 2:31 PM EST.

Alcoa (NYSE:AA), Reliance Steel & Aluminum (NYSE:RS) Boosted by Dahlman Rose

Alcoa (NYSE:AA) and Reliance Steel & Aluminum (NYSE:RS) were both upgraded by Dahlman Rose Friday, boosting them both from "Hold" to "Buy."

Concerning Alcoa, Dahlman said they see the company's downstream business improving, along with a stronger aluminum price outlook. Also noted was the alumina business, which they see becoming more profitable in 2011.

For Reliance, they see them benefiting from the broader U.S. domestic steel market continuing to improve. The construction market is expected to start to move within an estimated 9 to 12 months, suggesting companies may start to spend on steel and other materials before that. That could help Reliance through 2012 if that's how it works out.

Along with the steel industry, Dahlman also likes iron ore, copper, aluminum and molybdenum going forward.

Alcoa was trading at $16.01, gaining $0.26, or 1.68 percent, as of 3:03 PM EST. Reliance Steel was trading at $53.24, up $0.12, or 0.23 percent.

Aluminum Corp (NYSE:ACH), Alumina (NYSE:AWC), Alcoa (NYSE:AA), Century Aluminum (NASDAQ:CENX) in 2010

Most of the companies with strong aluminum exposure like Aluminum Corp (NYSE:ACH), Alumina (NYSE:AWC), Alcoa (NYSE:AA) and Century Aluminum (NASDAQ:CENX) got knocked down near the first part of January 2010, and most of them are still struggling to recover, although over the last several months they have rebounded some.

Aluminum Corp. ended the year at $22.79, gaining $0.23 on December 31, up 0.09 percent. The company had a 52-week trading range of $18.03 to $34.27. They ended the year with a market cap of $12.34 billion.

Alumina (NYSE:AWC) closed the year out at $10.18, losing $0.02 on the last trading day, down 0.20 percent. The trading range for 2010 was from $4.76 to $10.35. They ended the year with a market cap of $6.21 billion. Alumina was one of the more consistent and profitable performers in the aluminum sector in 2010.

Alcoa (NYSE:AA finished off the year at $15.39, gaining $0.18 on Friday, up 1.18 percent. The 2010 trading range for them was $9.81 to $17.60. They closed off the year with a market cap of $15.72 billion.

Century Aluminum ended 2010 at $15.53, down $0.18 on the final trading day of the year, losing 1.15 percent. Their trading range for the year was $8.25 to $18.77. Their market cap heading into 2011 is $1.44 billion.