Sunday, April 11, 2010

Alcoa (NSYE:AA) Quarterly Results Based on Aluminum Prices

Alcoa Quarterly Results Outlook

Taking all the factors into account for Alcoa (NSYE:AA), and the expected quarterly results are the same: aluminum prices continue to weigh down the company, although there will be a small profit of about 10 to 11 cents, according to most analysts.

For the rest of the year, most investors don't believe there will be any significant rebound in demand for aluminum, which will keep aluminum prices down, along with the share price of Alcoa.

While there has been some effective cost-cutting at Alcoa, if the estimates of most industry watchers are correct in that even though aluminum stands at 18-month highs, it has only increased by 3.3 percent in the first quarter, and that means there isn't much more the management can do to increase margins and profits unless the price does surprisingly go up.

Even in the best case scenario, there are other costs which have to be taken into account, like increasing energy prices and the U.S. dollar falling in value.

Others like analysts from J.P. Morgan (NYSE:JPM) feel the same way, as they downgraded the investment rating of Alcoa from "Overweight" to "Neutral" on Friday, and the price target from $21.50 to $16.50.

Morgan Stanley (NYSE:MS) also said the aluminum fundamentals aren't changing in the eyes of investors, and until that is seen to be a proven fact, it seems Alcoa has done about all it can do from the containing cost side, and only increased demand for products made from the metal will turn things around for them.

While there are some areas of positive signs, it probably won't be until the second half when business starts to increase for the Alcoa.

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