Alcoa
reported better-than-expected fourth-quarter numbers, lifting the aluminum producer’s stock.
The bad news is that the outlook for the coming year still isn’t great. Aluminum sales volume will be lower again in 2024.
Wednesday evening, Alcoa announced a fourth-quarter adjusted per-share loss of 56 cents from sales of $2.6 billion. Wall Street was looking for an 84-cent loss from sales of $2.6 billion. A year ago, Alcoa lost 70 cents a share from $2.7 billion in sales.
Alcoa stock was up 2%, at $27.72 a share shortly after the results were released. Both the better than-expected result and the stock’s starting point likely made a difference.
Through Wednesday trading, Alcoa stock was down roughly 50% over the past 12 months. The
S&P 500
was up about 19% over the same span.
Part of the problem for Alcoa stock has been weakening commodity prices. Benchmark aluminum prices are down about 15% over the past 12 months.
“In the fourth quarter of 2023, we made progress on key challenges, including gaining approval on our Western Australia bauxite mine plans, and we’re continuing to advance operational stability while we work to improve our global asset portfolio,” said CEO William Oplinger in a news release. “We are building on our positive momentum and implementing actions to drive improved profitability.”
Bauxite is used to make alumina, a raw material for aluminum metal. For the full year, Alcoa’s alumina production decreased 13% to 10.9 million tons due to capacity curtailments and what the company called “lower grade bauxite at the Australian refineries.”
Shipments of aluminum were down 3% year over year, coming in at 2.5 million tons.
Alcoa expects lower production again in 2024. The company is targeting roughly 9.9 million tons of alumina production. It expects to ship about 2.3 million tons of aluminum.
Options prices imply the stock will move roughly 7%, up or down, as investors digest the numbers on Thursday. Shares have moved about 6% on average over the past four quarterly reports. Each of those reports brought a slide in the stock price.
On Tuesday, UBS analyst Curt Woodworth initiated coverage of Alcoa with a Sell rating and a $29 price target. Part of the problem is weakening aluminum prices.
He isn’t alone in his bearish view. Only about 27% of analysts covering Alcoa stock rate share Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target is about $31 a share.
Alcoa management scheduled an earnings conference call at 5 p.m. Eastern time. Analysts and investors will be looking for tidbits on what 2024 holds for Alcoa as well as other commodity-producing companies.
Write to Al Root at [email protected]
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