Alcoa Q4 Earnings Preview: All Bets On An Aluminum Market Turnaround, Green Energy Transition

Alcoa Corp AA, will be releasing its fourth-quarter earnings on Jan. 17. Wall Street analysts are expecting the company to report a negative 78 cents in EPS and $2.63 billion in revenue, as it reports after market hours.

The company leads globally in aluminum production with a vertically integrated approach spanning five continents. As the aluminum market finds its balance in 2023-2024, people expect a surge in consumption within the green energy sector. This could potentially create a market deficit, presenting a unique opportunity for Alcoa over the long term.

Here's what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.

Alcoa Business & Fundamentals

As a major player in the aluminum and aluminum oxide space, Alcoa stands to benefit from two key transitions:

1. The depletion of existing global reserves,
2. An active energy transition. 

Aluminum as a metal is lightweight, has strength and unmatched corrosion resistance. Its durability is what makes it widely used to build renewable energy platforms like solar panels and wind turbines.

Material Sector Cyclical Play

However, being a material sector cyclical play, the company’s ability to navigate demand fluctuations remains a key variable in determining its attractiveness to investors.

2024 is being touted as a turnaround year for Materials sector stocks, especially those with attractive supply-demand dynamics. Alcoa’s strategic efforts have been focused on balancing phases of aluminum demand cycles. It does so by adjusting ownership stakes in its facilities and fields. So, if align well with market supply-demand dynamics, we could see some momentum building for the stock.

The material sector is also among Fidelity’s top three sectors for 2024. Per Fidelity’s sector managers, the most compelling potential opportunities for this year lie in the cyclical sectors.

Also Read: How To Earn $500 A Month From Alcoa Stock Ahead Of Q4 Earnings Report

Alcoa Analyst Focus And Consensus Estimates

Q4 Analysts' Focus: Alcoa’s total revenue is projected to decline in 2023. Despite some optimism surrounding the anticipated recovery in aluminum prices, the near-term outlook remains clouded. Alcoa’s earnings over the past four to five quarters have missed consensus a majority of times. A beat this quarter could provide a temporary boost to the stock.

Ratings & Consensus Estimates: While the consensus price target for the stock stands at $43.16, recent analyst ratings do not indicate much upside for the stock from current levels.

AA Price Action: Alcoa stock was trading at $29.55 at the time of publication.

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