Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Alcoa Earnings Surprise is Positive News for Global Economic Recovery

Companies / Corporate Earnings Jul 14, 2010 - 08:11 AM GMT

By: Money_Morning

Companies

Best Financial Markets Analysis ArticleDon Miller writes: When Alcoa Inc. (NYSE: AA) kicked off earnings season on Monday by soundly beating analysts' expectations, it flashed positive signals for the company and, more importantly, the entire global economic recovery.

The aluminum giant swung from a loss of $0.26 in the same quarter last year to a gain of $0.13 per share, exceeding by 18% the 11-cent average estimate of 17 analysts surveyed by Bloomberg News.


"It's a very positive signal for economic growth and the stock market generally," John Stephenson, who helps manage $1.6 billion including Alcoa shares at First Asset Investment Management in Toronto, told Bloomberg. "Maybe end-use demand has not been destroyed. That's a very good sign and a great way to start off this Q2 earnings season."

Alcoa's earnings aren't important just because they're first to report. As an aluminum producer, Alcoa's customers come from a wide range of industries, giving it an inside line on whether those industries are expanding or contracting.

Looking forward, Alcoa said it sees strength in the aerospace, automotive, gas turbine and building construction sectors. The company raised its global aluminum consumption forecast to 12% growth this year, compared with a previous forecast of 10%.

"Alcoa is now saying they are seeing faster demand growth and this is good," Charles Bradford, a partner at New York- based consulting firm Affiliated Research Group LLC, told Bloomberg. "I would have liked to see them post an even better number, but the industry is still very depressed."

Alcoa's positive earnings surprise was seconded by CSX Corp. (NYSE: CSX), the third-largest rail shipper in the nation, when it reported Monday that its second-quarter profit surged by 36% over a year ago to $1.07 a share. Analysts had been looking for 96 cents per share.

Overall revenue leapt 169% over last year and CSX reported that merchandise traffic rose 14%, automotive traffic rose 63%, metal rose 44%, chemical rose 10% and coal rose 7%.

Like Alcoa, CSX is seen as an economic bellwether simply because more goods get shipped around the country when economic activity is humming along.

The reports sparked a stock market rally on Wall Street yesterday (Tuesday) as the Dow Jones Industrial Average surged upwards 146.75 points to 10,363.02. The Standard & Poor's 500 average rose by 16.52 to 1,095.27 and the NASDAQ composite added 43.67 to close at 2,242.03.

The rally has rocketed the major averages up about 7% since they hit bottom on July 2. The current six-day winning streak is the longest since April.

Alcoa expects aluminum sales for automotive uses to increase by 3% to 8% this year, while sales for commercial trucks and trailers may gain 12% to 17%.

"Global production is expected to rise to around 66 million vehicles, that's a plus 15%. The growth is pretty much in every region except in Europe," Alcoa Chief Executive Officer Klaus Kleinfeld told The Wall Street Journal.

Kleinfeld added that demand for scrap metal, widely seen as another economic barometer, is also strong.

"We continue to see that scrap is very tight, and that continues to also drive primary metal demand," he said.

Alcoa is on the road back and sees indications of a recovery in almost all markets this year including the increasingly important Chinese market, Kleinfeld said.

"I continue to be optimistic on China and believe that we are managing very well through some of the overheating that happened in some of the markets and you see in all markets they are now going to the next phase and restructuring the market to the aluminum market to become more efficient and to become more power conscious," Kleinfeld said.

Alcoa's results were even more impressive considering overall aluminum prices are down and energy prices are up, narrowing the company's margins. In the face of shrinking operating margins, the company's strong performance can be attributed to cost efficiencies and strong volumes.

Aluminum prices have fallen 14% since March 31 and more than 40% from the July 2008 high, before the global recession cut demand.

After prices fell and inventories rose, Kleinfeld idled 20% of Alcoa's aluminum-smelting capacity. The company has lowered procurement costs by $1.4 billion so far this year, and eliminated another $311 million of overhead costs, Kleinfeld said on the call.

"We are really working very hard to fire on all cylinders," Kleinfeld said. "Undoubtedly we are not seeing the environment we've seen in the past but we see the environment getting better and continuously moving in the right direction."

Source : http://moneymorning.com/2010/07/13/alcoa/

Money Morning/The Money Map Report

©2010 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in