Alcoa Corporation (AA) Buy or Sell Stock Guide

Last updated: Jun 02, '18

The analysis below may be helpful to you if you have any of the following questions about AA stock:

  • Is AA a buy or a sell?
  • Should I sell or hold AA stock today?
  • Is AA a good buy / a good investment?
  • What are AA analyst opinions, recommendations, ratings?

Here are AA stock buy reasons/signals:

1. Aluminum demand and pricing are poised to recover from cyclical lows, thereby driving significant earnings growth potential for Alcoa.

2. Alcoa’s commodity-facing operations have each improved their cost position in recent years.

3. Alcoa’s outlook should improve as the global economy gradually recovers, as reflected by higher global GDP growth.

4. AA quarterly revenue growth was 16.40%, higher than the industry and sector average revenue growth (14.48% and 5.09%, respectively).

5. AA profitability is improving. The YoY profit margin change was 1.86pp.

6. AA forward P/E ratio is 11.00, and it’s low compared to its industry peers’ P/E ratios.

7. AA average analyst rating is Buy.

8. AA average analyst price target ($63.83) is above its current price ($47.64).

Here are AA stock sell reasons/signals:

1. Aluminum prices will move sharply lower into the future, weighing heavily on companywide profitability.

2. Overcapacity will remain a material headwind to aluminum price appreciation, driven largely by massive low-cost capacity additions in China.

3. The new Alcoa houses the less attractive assets from the legacy Alcoa business and might not appeal to long-term oriented investors.

4. AA PEG ratio (P/E adjusted for growth) is 0.96, and it’s high compared to its industry peers’ PEG ratios.

What are your thoughts on AA?

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