Alcoa Misses Earnings, Beats On Sales

Aluminum giant Alcoa (AA - Analyst Report) reported Q2 earnings after the bell Wednesday, and after an impressive string of beating bottom-line estimates -- the previous 4 quarters had an average positive earnings surprise of over 30 percent -- the company finally missed. Alcoa reported earnings of 19 cents per share, a miss from the 23 cents expected in the Zacks Consensus.
 
Revenues were better than expected, however: its $5.9 billion in sales for the quarter topped the Zacks Consensus estimate of $5,820 million. Integration costs from recent acquisitions and a Q2 investment in aerospace technology were two reasons cited for the miss on the bottom line. Alumina and Primary Metals segments were the only two groups to be down sequentially in the quarter.
 
Alcoa stock has taken a bath year to date, down 33.5 percent since January 1st. And the after-market trading rebound, such as it is (less than 1 percent at this time) follows a regular Wednesday trading day that saw the company lose 5 percent on the day, closing at lows not seen since mid-2013.
 
Otherwise, Alcoa looks to be on solid footing going forward. Following years of low margins and lukewarm earnings reports, Alcoa turned things around several quarters ago when it acquired airplane component maker Firth Rixson; the companies' synergies made an impact on Alcoa's earnings almost immediately, and the integration between it and another machine component acquisition, TITAL, are progressing toward their end-stages as planned.
 
Also, with updated automobile regulations -- especially in the required miles-per-gallon statutes in the U.S. -- aluminum became a preferred metal with which to manufacture cars and trucks. This assisted Alcoa greatly, as well. In Alcoa's Q2 earnings statement, the company reports a record volume of automotive sheet shipments, up approximately 200 percent from the year-ago quarter.