How Did Alcoa’s Headlines Change after the Split?



Alcoa’s headlines

Alcoa (AA) is among the most followed stocks on the exchanges. Recently, the stock has been in the news for two company-specific reasons. According to Reuters, Alcoa’s aluminum smelter in Australia has been operating at less than 30% capacity due to a temporary power outage. The outage would impact the smelter’s production profile.

Looking at the positive news flow, Alcoa signed another deal to supply bauxite from its Australia operations.

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How things changed

On November 1, 2016, Alcoa split into two new entities—Alcoa (AA) and Arconic (ARNC). The above graph shows the timeline of Alcoa’s split. The split completed the process that the company initiated in September 2015.

Investors who have been following Alcoa would recall that over the last few years, Alcoa’s upstream business mainly made headlines for closing or idling plants. Under its transformation strategy, Alcoa closed several of its high-cost operations to cope with depressed commodity prices (XLB).

Series overview

Alcoa’s growth drivers changed after the split. Improved commodity market sentiments are also helping Alcoa and other primary producers like Century Aluminum (CENX) and Norsk Hydro (NHYDY).

In this series, we’ll look at Alcoa’s growth drivers to understand what value proposition the company could offer to investors.

We’ll start by analyzing how the Fed’s rate hike could impact Alcoa.


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