uploads/2015/10/aa-cr.jpg

Analyzing Alcoa’s Performance Compared to Its Peers

By

Updated

Alcoa and its peers

An analysis of Alcoa’s income statement in 3Q15 follows:

  • The net profit margins of Alcoa (AA), Anheuser-Busch Inbev SA-ADR (BUD), Aluminum Corp. of China Limited (ACH), and Kaiser Aluminum (KALU) are 0.8%, 20.5%, 0.3%, and 5.5%, respectively.
  • The EPS (earnings per share) of Alcoa, Anheuser-Busch, BHP Billiton Plc (BBL), and Kaiser Aluminum are $0.02, $2.76, $0.64, and $1.11, respectively.

An analysis of Alcoa’s balance sheet in 3Q15 follows:

  • The current ratios of Alcoa, Anheuser-Busch, BHP Billiton, Aluminum Corp. of China Limited, and Kaiser Aluminum are 1.7, 0.7, 1.3, 0.8, and 3.3, respectively.

An analysis of Alcoa’s valuation follows:

  • The PE (price-to-earnings) ratios of Alcoa, Anheuser-Busch, and BHP Billiton are 22x, 19.2x, and 27.9x.
  • The PBV (price-to-book value) ratios of Alcoa, Anheuser-Busch, BHP Billiton, Aluminum Corp. of China Limited, and Kaiser Aluminum are 1.1x, 3.9x, 1.5x, 0.87x, and 1.9x, respectively.

According to the above findings, the peers outperformed Alcoa based on the net profit margin, EPS, and PBV ratio. However, Alcoa is way ahead of its peers based on the current ratio.

Article continues below advertisement

ETFs that invest in Alcoa

The SPDR S&P Metals and Mining ETF (XME) invests 3.7% of its holdings in Alcoa. XME tracks an equal-weighted index of US metals and mining companies. It holds firms classified as operating in the Metals and Mining sector by GICS. This includes coal firms.

The Guggenheim S&P Equal Weight Materials ETF (RTM) invests 3.2% of its holdings in Alcoa. RTM tracks an index of US material companies. The underlying index is an equal-weighted version of the material components of the S&P 500.

The iShares MSCI Global Select Metals & Mining Producers (PICK) invests 2.8% of its holdings in Alcoa. PICK tracks a market-cap-weighted index of global metals mining firms.

Comparing Alcoa and its ETFs

An analysis of Alcoa’s price movement follows:

  • The price movements of Alcoa, XME, RTM, and PICK are -29.8%, -37.6%, -6.8%, and -25.5%, respectively.

An analysis of Alcoa’s valuation follows:

  • The PE ratios of Alcoa, XME, RTM, and PICK are 22.x, -1.4x, 31.3x, and 74.1x, respectively.
  • The PBV ratios of Alcoa, XME, RTM, and PICK are 1.1x, 1.2x, 2.7x, and 0.17x, respectively.

The ETFs outperformed Alcoa based on the price movement, PE ratio, and PBV ratio.

Advertisement

More From Market Realist