Alcoa (AA) AI Stock Analysis

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Alcoa

(NYSE:AA)

Rating:63Neutral

Price Target:―

Alcoa's stock is moderately attractive, driven by strong financial performance and undervaluation. The earnings call reflects strategic progress but reveals challenges like revenue decline and tariff impacts. Technical indicators suggest current weakness, but valuation aspects may offer upside potential.

Positive Factors

Debt Management

The use of cash flow to reduce net debt should be a positive for the Alcoa equity valuation over time.

Financial Performance

A $10/t increase in bauxite prices would translate to ~$120m uplift in EBITDA for Alcoa.

Strategic Actions

Alcoa has recently taken several pivotal strategic actions to strengthen its business, including the sale of the Ma’aden joint venture interest, the acquisition of Alumina Ltd, and over-delivering on its profitability program.

Negative Factors

Earnings Estimates

Alcoa's price objective is reduced to $25 per share on reduced full year 2025/26 earnings estimates, and an Underperform rating is reiterated.

Operational Challenges

The planned restart of the San Ciprian smelter under the viability agreement is expected to have a negative $70-90m impact on 2025 EBITDA and negative $100-120m impact on FCF for next year.

Tariff Impact

Uncertainty amid abnormal volatility in alumina prices and the negative impact of new US tariff policy on aluminum.

Alcoa (AA) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$7.45B

Dividend Yield1.39%

Average Volume (3M)7.17M

Price to Earnings (P/E)8.5

Beta (1Y)1.85

Revenue Growth21.56%

EPS GrowthN/A

CountryUS

Employees13,900

SectorBasic Materials

Sector Strength60

IndustryAluminum

Share Statistics

EPS (TTM)2.15

Shares Outstanding258,902,340

10 Day Avg. Volume7,550,065

30 Day Avg. Volume7,174,470

Financial Highlights & Ratios

PEG Ratio<0.01

Price to Book (P/B)1.15

Price to Sales (P/S)0.00

P/FCF Ratio19.28

Enterprise Value/Market Cap1.09

Enterprise Value/Revenue0.18

Enterprise Value/Gross Profit3.34

Enterprise Value/Ebitda2.10

Forecast

1Y Price Target

$31.43

Price Target Upside11.18% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Alcoa Business Overview & Revenue Model

Company DescriptionAlcoa Corporation, together with its subsidiaries, produces and sells bauxite, alumina, and aluminum products in the United States, Spain, Australia, Iceland, Norway, Brazil, Canada, and internationally. The company operates through three segments: Bauxite, Alumina, and Aluminum. It engages in bauxite mining operations; and processes bauxite into alumina and sells it to customers who process it into industrial chemical products, as well as aluminum smelting and casting businesses. The company offers primary aluminum in the form of alloy ingot or value-add ingot to customers that produce products for the transportation, building and construction, packaging, wire, and other industrial markets. In addition, it owns hydro power plants that generates and sells electricity in the wholesale market to traders, large industrial consumers, distribution companies, and other generation companies. The company was formerly known as Alcoa Upstream Corporation and changed its name to Alcoa Corporation in October 2016. The company was founded in 1888 and is headquartered in Pittsburgh, Pennsylvania.

How the Company Makes MoneyAlcoa makes money primarily through the production and sale of bauxite, alumina, and aluminum products. The company's revenue model is centered around its vertically integrated operations, which allow it to control costs and optimize its supply chain from mining to finished product. Key revenue streams include the sale of bauxite to third-party customers, the production of alumina for both internal use and external sales, and the fabrication of aluminum products for various industries. Alcoa's financial performance is also influenced by aluminum market prices, operational efficiencies, and strategic partnerships with major industrial players. Additionally, the company invests in innovation and sustainability initiatives to enhance product offerings and meet the evolving demands of its customers.

Alcoa Key Performance Indicators (KPIs)

Any

New Chart

New Chart
Provides insights into Alcoa's latest metrics or trends, highlighting areas of innovation, strategic shifts, or emerging challenges within the company.

Chart InsightsAlcoa's recent metric shows a significant drop, which aligns with the company's reported revenue decline due to lower prices and shipments in the Alumina segment. Despite this, Alcoa's earnings call highlights strong financial resilience, with increased net income and strategic debt management. The company faces challenges from U.S. tariffs and costs related to the San Ciprian smelter restart, but its joint venture formation and operational improvements suggest a focus on long-term stability and growth.

Data provided by:

Main Street Data

Alcoa Financial Statement Overview

Summary

Alcoa demonstrates strong revenue growth and operational efficiency improvements, resulting in better profitability metrics. The balance sheet is strengthened by lower leverage and improved equity returns. However, cash flow management poses a challenge with negative free cash flow growth. Overall, Alcoa is on a positive trajectory but needs to address cash flow issues to sustain long-term growth.

Income Statement

Positive

Alcoa shows a strong revenue growth with a 7.9% increase in TTM compared to the previous year. The gross profit margin improved significantly to 39.7% TTM. However, net profit margin remains low at 6.8% TTM, albeit an improvement from the previous year. EBIT and EBITDA margins have both improved to 33.5% and 16.9% TTM respectively, indicating better operational efficiency.

Balance Sheet

Positive

Alcoa's balance sheet reflects a robust equity position, with an equity ratio of 39.9% TTM. The debt-to-equity ratio has improved significantly to 0.01 TTM, indicating lower leverage. Return on equity has improved to 14.8% TTM, showing better profitability. However, the high total liabilities pose a risk to financial stability.

Cash Flow

Positive

Operating cash flow has increased by 47.9% TTM, showing strong cash generation. However, free cash flow growth is negative, declining by 17.1% TTM, highlighting concerns over capital expenditures. The operating cash flow to net income ratio is 1.07, indicating efficient cash conversion, but free cash flow to net income ratio remains low at 0.40.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
12.66B	11.89B	10.55B	12.45B	12.15B	9.29B
	Gross Profit
2.44B	1.85B	738.00M	2.24B	3.00B	1.32B
	EBIT
1.65B	1.52B	-584.00M	702.00M	1.20B	173.00M
	EBITDA
2.14B	1.52B	48.00M	1.32B	1.86B	826.00M
	Net Income Common Stockholders
860.00M	60.00M	-651.00M	-123.00M	429.00M	-170.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.20B	1.14B	944.00M	1.36B	1.81B	1.61B
	Total Assets
14.57B	14.06B	14.15B	14.76B	15.03B	14.86B
	Total Debt
2.65B	2.82B	1.92B	1.87B	1.87B	2.62B
	Net Debt
1.45B	1.68B	971.00M	503.00M	52.00M	1.02B
	Total Liabilities
8.66B	8.91B	8.31B	8.17B	8.74B	9.84B
	Stockholders Equity
5.82B	5.16B	4.25B	5.08B	4.67B	3.31B
Cash Flow		Free Cash Flow
348.00M	42.00M	-440.00M	342.00M	530.00M	41.00M
	Operating Cash Flow
920.00M	622.00M	91.00M	822.00M	920.00M	394.00M
	Investing Cash Flow
-660.00M	-608.00M	-585.00M	-495.00M	565.00M	-167.00M
	Financing Cash Flow
-415.00M	201.00M	57.00M	-768.00M	-1.16B	514.00M

Alcoa Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price28.27

Price Trends

50DMA

28.02

Positive

100DMA

31.76

Negative

200DMA

34.79

Negative

Market Momentum

MACD

0.55

Negative

RSI

54.97

Neutral

STOCH

77.27

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AA, the sentiment is Neutral. The current price of 28.27 is above the 20-day moving average (MA) of 26.64, above the 50-day MA of 28.02, and below the 200-day MA of 34.79, indicating a neutral trend. The MACD of 0.55 indicates Negative momentum. The RSI at 54.97 is Neutral, neither overbought nor oversold. The STOCH value of 77.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AA.

Alcoa Risk Analysis

Alcoa disclosed 28 risk factors in its most recent earnings report. Alcoa reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 1 New Risks

The secondary listing of the Alcoa common stock on the Australian Stock Exchange (ASX) via CDIs could lead to price variations and other impacts on the price of Alcoa common stock. Q4, 2024

Alcoa Peers Comparison

Overall Rating

UnderperformOutperform

Sector (50)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
USLM	78 Outperform	$2.98B	24.84	25.44%	0.20%	17.83%	50.28%
KALU	68 Neutral	$1.18B	27.21	6.16%	4.25%	1.56%	-22.11%
CENX	66 Neutral	$1.51B	13.93	18.03%	―	11.42%	-49.21%
AA	63 Neutral	$7.45B	8.52	17.53%	1.39%	21.56%	―
CSTM	63 Neutral	$1.77B	26.77	7.93%	―	-2.29%	-48.13%
Sector *	50 Neutral	$2.00B	-1.02	-21.34%	3.70%	2.00%	-30.65%
CLF	48 Neutral	$3.64B	―	-17.57%	―	-15.00%	-423.14%

* Basic Materials Sector Average

Performance Comparison

Alcoa

28.27

-12.28

-30.28%

CENX

Century Aluminum

15.80

-1.83

-10.38%

CLF

Cleveland-Cliffs

7.00

-9.92

-58.63%

KALU

Kaiser Aluminum

70.49

-20.95

-22.91%

USLM

United States Lime & Minerals

104.29

34.04

48.46%

CSTM

Constellium

12.10

-9.12

-42.98%

Alcoa Earnings Call Summary

Earnings Call Date:Apr 16, 2025

(Q1-2025)

% Change Since: 13.17%|

Next Earnings Date:Jul 16, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong financial and production results, an increase in net income, and successful debt management. However, challenges such as revenue decline, the impact of U.S. tariffs, and costs associated with the San Ciprian restart were significant concerns.

Q1-2025 Updates

Positive Updates

Strong Financial and Production Results

Alcoa achieved strong first-quarter financial and production results, with significant improvements in safety performance and operational stability across most operations.

Increase in Net Income and EPS

Net income attributable to Alcoa increased to $548 million from $202 million in the previous quarter, with earnings per common share more than doubling to $2.07 per share.

Joint Venture Formation and Debt Management

Alcoa formed a joint venture with Ignis EQT for the San Ciprian operations and completed a $1 billion debt offering in Australia, using proceeds to repay existing debt and extend maturities at a lower after-tax interest expense.

Positive Free Cash Flow

Alcoa ended the first quarter with $1.2 billion in cash, driven by strong EBITDA and positive cash from operations despite high working capital build.

Negative Updates

Revenue Decline

Revenue decreased 3% sequentially to $3.4 billion, with declines in third-party revenue in the Alumina segment due to lower average realized prices and shipments.

Impact of U.S. Tariffs

The U.S. Section 232 tariffs on Canadian aluminum imports significantly impacted Alcoa, with an estimated annual net negative impact of approximately $100 million.

Challenges with San Ciprian Restart

The restart of the San Ciprian smelter is expected to result in a negative cash flow impact of $90 million to $110 million for 2025 due to inefficiencies and other costs.

Company Guidance

In the first quarter of 2025, Alcoa Corporation reported a strong performance, with a sequential revenue decrease of 3% to $3.4 billion and net income attributable to Alcoa rising to $548 million. Earnings per share more than doubled to $2.07, while adjusted net income was $568 million or $2.15 per share. The adjusted EBITDA increased by $178 million, reaching $855 million. Despite economic uncertainties, Alcoa maintained operational stability, showing improved production metrics, such as a 91% capacity operation at the Alumar smelter in Brazil. The company executed a $1 billion debt offering in Australia, which provided cash flow flexibility, ending the quarter with $1.2 billion in cash. Alcoa plans to maintain its capital allocation framework, targeting an adjusted net debt range of $1 billion to $1.5 billion. They also adjusted their full-year depreciation expense forecast to $620 million, citing favorable currency impacts. However, Alcoa faces challenges with U.S. Section 232 tariffs on Canadian aluminum, which are expected to cost approximately $400 to $425 million annually, impacting the second quarter performance by around $105 million. Despite these challenges, Alcoa's strategic actions, such as forming a joint venture with Ignis EQT and resuming production at the San Ciprian smelter, are expected to support their continued resilience and strategic objectives.

Alcoa Corporate Events

Executive/Board ChangesShareholder Meetings

Alcoa Elects Directors and Approves Auditor Appointment

Neutral

May 13, 2025

On May 8, 2025, Alcoa Corporation held its Annual Meeting of Stockholders, where all 11 director nominees were elected for a one-year term. Additionally, stockholders approved the appointment of PricewaterhouseCoopers LLP as the independent auditor for 2025 and endorsed the executive officer compensation for 2024, reflecting continued confidence in the company’s leadership and strategic direction.

The most recent analyst rating on (AA) stock is a Buy with a $50.00 price target. To see the full list of analyst forecasts on Alcoa stock, see the AA Stock Forecast page.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.