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No end in sight to Alcoa’s woes as it heads to Q3 earnings

Shares of Alcoa Corporation (NYSE: AA) have been on a downward trend for the past 18 months, and there seems to be little resistance to break the fall. Since the beginning of this year, the stock has lost a third of its value.

The company is expected to report third-quarter financial results after the closing bell on Wednesday, October 16. Wall Street expectations have hit a rock bottom, with revenues projected to plunge another 23% to $2.6 billion.

Photo Courtesy: Alcoa / Facebook post

Analysts expect the manufacturer of aluminum products to swing to a massive loss of 33 cents per share from earnings of 63 cents per share last quarter. In what could be seen as evidence for the rising pessimism on the stock, analysts have thrice slashed the earnings estimate in the last three months, from the initial target of 19 cents per share profit.    

Alcoa has been facing multiple challenges, including low demand for its products and uncertainties from the US-China trade dispute. The management had earlier stated that global demand for aluminum will remain sluggish till the end of this year, primarily due to the oversupply of alumina in the Atlantic Basin.

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In the second quarter, Alcoa swung to a loss from a profit last year, reflecting a sharp fall in revenues amid faltering demand and lower prices. The bottom line, however, came in above the consensus estimate.

The stock has a Moderate Buy rating with a 12-month average price target of $25.17, suggesting a 35% upside from Thursday’s trading price.

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