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Earnings Season: Is Wall Street too bullish on Alcoa?

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Wall Street analysts see potential in Alcoa stock, which is down around 30% this year, but Saxo Bank’s Mads Koefoed is less convinced and here’s why.

US metals company Alcoa is due to report second quarter earnings on July 8 after market close. Alcoa is expected to present Q2 earnings per share (EPS) of USD 0.23 versus 0.18 a year ago, while revenue is seen at USD 5.8 billion compared to 5.84 billion in Q2 2014.

Koefoed’s main focus will be on how well Alcoa has integrated its latest acquisitions as it seeks to diversify its business away from traditional smelting and refining to more profitable products for the aerospace and auto industries.

Alcoa announced in March it had agreed to titanium supplier RTI for USD 1.3 billion - just a week after completing its acquisition of Tital, a German manufacturer of titanium and aluminium castings for aircraft.

Koefoed will also be keeping an eye on how Alcoa plans to address current challenges such as weak economic growth in Europe and oversupply in the market, which could put a damper on its earnings.