Alcoa or Arconic: Which Stock Analysts Prefer This Earnings Season
So far in this series, we’ve looked at Arconic’s (ARNC) 1Q17 earnings estimates. Alcoa (AA) is scheduled to release its 1Q17 earnings on April 24, one day before Arconic’s earnings release.
Now that it has split with Arconic, Alcoa is now a pure play commodity producer (XME), while Arconic is an engineering company (ATI) (CSTM), with the automobile and aerospace sectors as its key end markets. With the 1Q17 results just around the corner, let’s see how Wall Street analysts are rating these companies.
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According to the consensus estimates compiled by Thomson Reuters, Alcoa has a mean one-year price target of $42.76, which implies a 36.4% upside over its closing price on April 19, 2017. Arconic’s consensus price target implies a 10.9% upside over its April 19, 2017, closing price.
Alcoa’s target price implies a higher upside than its current price levels. That said, Alcoa’s recent price action has disappointed markets. While aluminum, which is a key driver of Alcoa’s earnings, has been holding steady, Alcoa’s price action has diverged from aluminum prices. (For more, you can read Market Realist’s “Is There a Disconnect Between Alcoa and Aluminum Prices?“)
Analysts appear to favor Alcoa over Arconic this year. Of the 13 analysts surveyed by Thomson Reuters, ten analysts recommended Alcoa stock as a “buy” or some equivalent, while the remaining 23% analysts recommended the stock as a “hold.” None of the analysts recommended Alcoa as a “sell.”
Arconic stock has received a “buy” or equivalent rating from 38% of analysts polled by Thomson Reuters. One out of eight analysts rated Arconic as a “hold,” while the remaining 50% of analysts rate it as a “hold.”
You can read Market Realist’s series Analysts Rate Aluminum Stocks before Their 1Q17 Earnings to explore the recent changes in analysts’ ratings.
For ongoing updates on the industry, visit Market Realist’s Aluminum page.