For the second straight quarter, aluminum giant Alcoa (AA) has wowed investors with a very big earnings beat. Importantly, in the company's fiscal Q2 reported after the bell Tuesday, Alcoa also posted an impressive beat in revenues: $5.84 billion came in for the quarter — much better than the $5.51 expected — on earnings of 18 cents per share, topping the Zacks Consensus Estimate of 13 cents for a 38.5% positive surprise.
There is much to like about this report: Alcoa's sales were 7% higher than last quarter, global aluminum demand maintained a 7% growth projection for 2014, and its Engineered Products and Solutions set all-time records in both after-tax operating income ($204M) and recorded adjusted EBITDA margin (23.1%).
As one might expect, Alcoa shares shot up immediately in the after-market, jumping 3% (the stock has tempered a bit since) on a modestly positive regular trading day. This follows what has been an excellent 2014 overall so far: AA shares are up nearly 40% year to date. Alcoa is up a full 90% since this time last year. Not bad for a Dow stalwart unceremoniously booted off the index in September 2013.
Alcoa also recently purchased Firth Rixson for just under $3 billion, and there is some good news here for Alcoa investors, as well: aerospace demand growth guidance is up 8-9% for 2014; it would seem a good time to have aquired a jet engine component maker.
Typically, analyst estimate revisions have been all over the place prior to the earnings release: 4 upward revisions, 2 downward revisions, for Alcoa's Q2 and fiscal 2014. Prior to earnings, Alcoa carried a Zacks Rank #3 (Hold).
Although Alcoa has been known to "kick off" earnings season each quarter, it had been quite awhile since it's been considered a "sexy" stock. But with performances like these of the past two quarters, investors may wish to do a double-take before passing up these shares.
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