As it is with every quarter, one of the biggest names in the commodities world is set to kick off the Q2 2013 earnings season early next week. Aluminum giant Alcoa (AA) is slated to announce its latest earnings report this Monday, July 8, after the closing bell. As Alcoa is not only one of the largest mining firms in the U.S., but also the one of the first major firms to report its earnings each quarter, the company often sets the tone for industry expectations [for more commodity news and analysis subscribe to our free newsletter].
So far in 2013, the bellwether has struggled to gain momentum, as depressed aluminum prices and global economic concerns have weighed heavily on the stock. Already this year, the company announced its plans to close its Fusina primary aluminum smelter in Italy in an attempt to reduce costs and maintain competitiveness. And with more restructuring plans on the way, analysts have been somewhat bearish on Alcoa’s latest quarterly results.
Analyst expect Alcoa’s second quarter earnings to come in at $0.08 per share; the range of estimates are between $0.04 and $0.16. In Alcoa’s last earnings report, the bellwether posted a surprisingly strong EPS of $0.11 versus the expected $0.08 [see 3 Commodities Looking To Turn It Around in 2013].
Revenues are expected to be recorded at $5.9 billion in Q2, while sales are forecasted to slip 0.7% from the prior year’s results. Back in April, Alcoa had missed analysts expectations, posting revenues at $5.8 billion for the first quarter compared to the forecasted $5.9 billion.
Last week, however, JPMorgan downgraded its rating on the stock from overweight to neutral, citing the bank’s reduced expectations for aluminum prices as the primary reason for the downgrade. While JPMorgan did acknowledge the company’s latest efforts to reduce costs in its upstream segments and to grow its downstream businesses, the bank believes the persistently weak aluminum market will likely overshadow these efforts [see How The LME Is Impacting Beer Prices].
A Citi analyst also reduced his expectations for Alcoa, stating that second-quarter profit is expected to come in at just $0.07 per share. Citi did however keep its rating on the stock unchanged from neutral.
Alcoa’s Performance Recap
With global economic uncertainties and depressed aluminum prices weighing heavily on the stock, Alcoa has lost nearly 15% year-to-date. Over the trailing 1-month period, the stock is down 8.45%. And while Alcoa is a key component of the Dow Jones Industrial Average, the index has managed to perform significantly better than the company; year-to-date the Dow is up 11.33% (data as of 8:52 CST 7/3/2013):
Disclosure: No positions at time of writing.