The earnings of Alcoa: will they move the stock?

What

The oldest US aluminum company Alcoa will post its earnings report for the fourth quarter of 2019 on January 16 at midnight.

The quarterly earnings report is the document, which provides insights into the company’s performance during the previous period. For a trader, it shows if the company’s stock worth buying or not. Among all the measures included in the report, it is recommended to follow the revenue figures and EPS (earnings per share). They are the heart of the fundamental analysis of a company.

How

Experts provide their predictions ahead of the upcoming release, based on the news and the previous releases. If the actual levels of revenue and EPS (expected on January 16) are better than the forecasts, the stock will jump. On the contrary, lower-than-expected figures will pull the stock down.

A glimpse into past

As Alcoa’s performance is heavily dependent on the prices of aluminum, the company has been facing quite tough times. The aluminum was not an attractive investment during the last two years; the price of the aluminum futures bottomed from the levels above $2,300 to the lows between $1,700-1,800. As a result, the aluminum giant reported yet another wider-than-expected quarterly loss of -0.44 EPS (vs. the expected -0.33) on October 16. At the same time, Alcoa posted revenue of $2.57 billion, surpassing the estimates. The mixed information resulted in the hard battle between bulls and bears. As we can see in the picture, the stock fell a bit, but buyers managed to take back their previous day’s gains.

What’s now?

After the disappointing release, the company announced a reorganization aiming to create a more integrated organization. As we can see in the picture above, the price gapped up on the announcement. Now, analysts forecast the decline in revenue to $2.48 billion and a loss of $0.22 in EPS. However, if the changes in the company’s structure during the previous quarter brought positive results, the figures may overcome the projections. In that case, Alcoa stock will rise. The next targets from the upside lie at $20.95 and $21.6. If the loss is wider than the forecasts, sellers will target $19.5 and $18.2.

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