AA  Alcoa Inc.

Exchange

NYSE

Sector

Capital Goods

Industry

Metal Fabrications

Market Cap.

6.07B

Vuru Grade

6.50/100

Current Price

$32.96
+0.67 (+2.07%)

Growth Price

$5.72
Overvalued by 82.66%

Company Metrics

  • P/E 177.20
  • P/S 0.60
  • P/B 1.01
  • EPS 0.19
  • Cash ROIC -0.10%
  • Cash Ratio 0.30
  • Dividend 0.36 / 1.25 %
  • Avg. Vol. 4.67M
  • Shares 184.16M
  • Market Cap. 6.07B

Company Description

Alcoa, Inc. engages in the production and management of aluminum, fabricated aluminum, and alumina. The company operates in four segments: Alumina, Primary Metals, Flat-Rolled Products, and Engineered Products and Solutions. The Alumina segment engages in mining of bauxite, which is then refined into alumina. The Primary Metals segment produces aluminum. The Flat-Rolled Products segment engages in... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Alcoa Corp. (AA) Stock Up on Q1 Earnings Beat
Nasdaq - Apr 24, 2017
Alcoa Corp. AA just released its first quarter 2017 financial results, posting earnings of $0.63 per share and revenues of $2.66 billion.
Alcoa Corp.'s Earnings Show Progress Toward the Future - Motley Fool
Alcoa Surges as New Management Proves Mettle With Earnings Beat - Bloomberg
Systematic Financial Management Lp Buys Alcoa Corp, Toll Brothers Inc ...
Nasdaq - May 11, 2017
Systematic Financial Management Lp initiated holdings in Alcoa Corp. The purchase prices were between $28.83 and $38.56, with an estimated average price of $34.99.
BRIEF-Arconic announces debt-for-equity exchange for Alcoa Corp common stock
Reuters - Apr 26, 2017
BRASILIA, May 18 A Brazilian congressman sponsoring a pension reform bill said on Thursday there was "no room to advance" on the legislation after President Michel Temer came under investigation for allegedly condoning bribery of a potential witness in ...
Alcoa Corp (AA) Needle Moving 2.23%
Lenox Ledger - 15 hours ago
Shares of Alcoa Corp (AA) are moving on volatility today 2.23% or $0.72 from the open. The NYSE listed company saw a recent bid of $33.01 and 2210995 shares have traded hands in the session.
Somewhat Positive News Coverage Likely to Affect Alcoa Corp (AA) Stock Price
The Cerbat Gem - 14 hours ago
Alcoa Corp logo News headlines about Alcoa Corp (NYSE:AA) have trended somewhat positive on Monday, AlphaOne Sentiment reports.
The Alcoa Corp's (AA) “Buy” Rating Reaffirmed at Citigroup Inc - BangaloreWeekly
Alcoa Corp (AA) Given Buy Rating at Citigroup Inc - Stock Observer
3 Stocks to Watch on Tuesday: Alcoa Corp (AA), Caterpillar Inc. (CAT) and ...
Investorplace.com - Apr 25, 2017
The Monday upswing for U.S. equities was highlighted by a 2.2% surge for financial stocks. That resulted in a 1.1% bump for the S&P 500 and the Dow Jones Industrial Average, as well as a 1.2% improvement for the Nasdaq Composite.
Nick in the AM: Like Alcoa, might Caterpillar be a prodigal son? - Peoria Journal Star
Alcoa (AA) Presents at Bank of America Merrill Lynch Global Metals, Mining and ...
Seeking Alpha - May 17, 2017
We've spent a lot of time in Alcoa Corporation trying to simplify, simplify, simplify from what used to be Alcoa, Inc. As a much simpler lines of businesses, as a smaller company and one that's tied to commodity cycles in aluminum, albeit with some ...
Brokers Release Average Price Target Of 38.79 On Alcoa Inc. (NYSE:AA) - UK Market News
JPMorgan on Alcoa Corp (NYSE:AA)
Smаrt Stоck Nеws - Apr 25, 2017
Alcoa Corp (NYSE:AA) reported solid Q1 results and maintained its 2017 EBITDA guidance, and we is modestly increasing its estimates.
Arconic Closes Exchange of Alcoa Stock, Cuts $800M of Debt
Zacks.com - May 8, 2017
Arconic Inc. (ARNC - Free Report) said that it has wrapped up the earlier announced exchange of its remaining 12,958,767 shares of common stock of Alcoa Corp. (AA - Free Report) for roughly $428.6 million total principal amount of Arconic debt held by ...
Arconic Completes Debt-For-Equity Exchange of Alcoa Corporation Common Stock ... - Business Wire (press release)
Arconic Inc (ARNC) Bonds Trading 1.7% Lower - The Cerbat Gem
Alcoa Corp. (AA) And Its Technical Chart Is Now Center Stage
NY Stock News - Apr 27, 2017
Alcoa Corporation (AA) is now trading with a very clear set of technicals. Taken together they paint a very compelling picture of how investors and traders should be approaching AA.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for AA to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate AA's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$32.96 Current Price

$5.72 Growth Price (DCF)

Overvalued by 82.66%


Growth Rate Assumed by Market: 500.00%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


AA's most recent year of (normalized) free cash flow is negative. This is the base number for forward projections. This means that if you increase the growth rate, the amount of negative FCF grows, thereby decreasing the price.

Show Free Cash Flow numbers

$33.24 Book Price

Fairly valued


Very Poor Cash Return on Invested Capital over the past 5 years

AA has failed to generate positive returns on its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

AA has lost $0.10 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 236.00M 385.00M 455.00M 402.00M -715.00M
divided by
Invested Capital 32.38B 28.20B 29.98B 29.40B 13.07B
Cash ROIC 0.73% 1.37% 1.52% 1.37% -5.47%

Very Poor Return on Equity over the past 5 years

AA has shown an inability to deliver results for shareholders. This could be due to poor management, AA operating in a highly competitive industry, or having a weak business in general.

AA has generated a $5.25 loss for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 162.00M -2.24B 177.00M -197.00M -346.00M
divided by
Stockholders' Equity 13.20B 10.59B 12.31B 12.05B 5.65B
Return on Equity 1.23% -21.18% 1.44% -1.64% -6.12%

Mediocre Business Performance over the past 10 years

AA isn't a strong business and might be consistently attempting to fuel growth with debt or has trouble staying profitable. The lack of predictability in free cash flow should be concerning for the reliability of future earnings.

AA has been unable to consistently create value for shareholders.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow -525.00M -2.18B -257.00M 1.25B 906.00M 236.00M 385.00M 455.00M 402.00M -715.00M

Weak Balance Sheet

AA's financial position is not ideal. The key is to check whether AA is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 483.00M 762.00M 1.48B 1.54B 1.94B 1.86B 1.44B 1.88B 1.92B 853.00M
Current Assets 8.09B 8.15B 7.02B 6.87B 7.71B 7.70B 6.97B 8.27B 7.95B 3.18B
Total Assets 38.80B 37.82B 38.47B 39.29B 40.12B 40.18B 35.74B 37.40B 36.53B 16.74B
Current Liabilities 7.17B 7.28B 5.41B 5.24B 6.01B 5.94B 6.11B 5.54B 5.21B 2.82B
Total Liabilities 22.79B 26.09B 26.05B 25.68B 26.28B 26.98B 25.15B 25.09B 24.48B 11.09B
Stockholder' Equity 16.02B 11.74B 12.42B 13.61B 13.84B 13.20B 10.59B 12.31B 12.05B 5.65B
Current Ratio 1.13 1.12 1.30 1.31 1.28 1.30 1.14 1.49 1.53 1.13
TL-to-TA 0.59 0.69 0.68 0.65 0.65 0.67 0.70 0.67 0.67 0.66

Low or No Reinvestment of Profits over the past 10 years

AA has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to AA operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 13.04B 12.40B 11.02B 11.15B 11.63B 11.69B 9.27B 9.38B 8.83B -104.00M
Retained Earnings Growth - -4.90% -11.13% 1.17% 4.31% 0.52% -20.68% 1.15% -5.81% -101.18%

Loss Making Entity over the past 10 years

AA has been unable to maintain profitability. It's Costs of Sales have outstripped Revenue consistently. This is a huge red flag, unless the company has been investing heavily for the future. However, even that is dubious since accurately predicting the future of a company like that is extremely difficult.

$0.57 of every $100 of Revenue have been a loss, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 2.56B -74.00M -1.09B 392.00M 805.00M 162.00M -2.24B 177.00M -197.00M -346.00M
divided by
Revenue 30.75B 26.90B 18.44B 21.01B 24.95B 23.70B 23.03B 23.91B 22.53B 9.32B
Net Profit Margin 8.34% -0.28% -5.91% 1.87% 3.23% 0.68% -9.74% 0.74% -0.87% -3.71%

Inconsistent Gross Profit Margins over the past 10 years

AA has good gross profit margins, however inconsistency of these margins is a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$24.94 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 6.50B 4.73B 1.54B 3.84B 24.77B 3.21B 3.75B 4.77B 4.47B 1.42B
divided by
Revenue 30.75B 26.90B 18.44B 21.01B 24.95B 23.70B 23.03B 23.91B 22.53B 9.32B
Gross Margin 21.14% 17.57% 8.34% 18.27% 99.26% 13.56% 16.26% 19.95% 19.81% 15.24%

High Capital Intensity over the past 10 years

AA spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

405.54% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 3.64B 3.41B 1.62B 1.02B 1.29B 1.26B 1.19B 1.22B 1.18B 404.00M
divided by
Net Income 2.56B -74.00M -1.09B 392.00M 805.00M 162.00M -2.24B 177.00M -197.00M -346.00M
Capital Expenditure Ratio 141.81% -4,612.16% -148.81% 258.93% 159.88% 778.40% -53.16% 688.70% -598.98% -116.76%

Inconsistent Dividend History over the past 10 years

AA has started distributing dividends in the past couple years or has recently suspended their dividend distribution. The reliability of future distributions is unclear.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 590.00M 556.00M 368.00M 381.00M 388.00M 226.00M 241.00M 281.00M 329.00M -
divided by
Shares Outstanding 868.47M 818.00M 935.77M 1.03B 1.16B 1.08B 1.07B 1.18B 1.26B 183.00M
Dividend Paid Per Share 0.68 0.68 0.39 0.37 0.33 0.21 0.23 0.24 0.26 -
Price at Year End 34.05 10.17 15.96 15.04 8.62 8.50 10.53 15.85 9.96 28.08
Dividend Yield 2.00% 6.68% 2.46% 2.47% 3.88% 2.47% 2.14% 1.50% 2.62% -

History of Stock Buybacks over the past 10 years

AA has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 868.47M 818.00M 935.77M 1.03B 1.16B 1.08B 1.07B 1.18B 1.26B 183.00M
Stock Bought Back - 6.17% -12.59% -8.71% -11.71% 7.90% 0.56% -9.32% -6.27% 587.98%
Share your thoughts about AA

Sign Up or Log In to start contributing!


Discussion

Nothing here yet. Be the first to post!