Alcoa Investors Continue to Party despite 4Q16 Earnings Miss



Alcoa’s 4Q16 earnings miss

Alcoa (AA) reported its 4Q16 financial results on January 24. Alcoa reported a net loss of $125 million in 4Q16. It translates into a loss per share of $0.68. However, the net loss is mainly due to one-time losses associated with Alcoa’s curtailment of the Suriname refinery and impairment of the company’s interest in a Western Australia gas field.

After adjusting for special items of $151 million, Alcoa reported an adjusted net income of $26 million in 4Q16. It translates into EPS (earnings per share) of $0.14. The company posted an adjusted loss per share of $0.52 in 3Q16. Alcoa’s 4Q16 earnings were worse than expected. According to data compiled by Thomson Reuters, analysts expected Alcoa to post an adjusted EPS of $0.15 during the quarter.

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Rally continues

Despite the EPS miss, Alcoa’s 4Q16 financial results were received well by markets. Alcoa stock closed with gains of 3.3% on January 24. The stock was trading higher in after-hours trading. Notably, Alcoa has been on an uptrend since the split. There has been a broader recovery in aluminum producers’ stock prices. Several factors supported aluminum producers’ price action. First, metal producers (RIO) (NHYDY) like Alcoa and Century Aluminum (CENX) have been on a roll since the presidential election due to expectations of a revival in US metal demand (XME). Second, the United States launched a formal complaint with the World Trade Organization over alleged subsidies received by Chinese aluminum producers.

Series overview

In this series, we’ll explore Alcoa’s 4Q16 earnings and management’s guidance. We’ll also cover some key points from the company’s 4Q16 earnings conference call. Let’s start by analyzing Alcoa’s 4Q16 revenues.


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