Alcoa Corp (AA, Financial), a leading player in the metals and mining industry, has recently experienced a notable uptick in its stock performance. With a current market capitalization of $6.01 billion, the company's stock price stands at $33.66. Over the past week, Alcoa's shares have seen a 7.09% gain, while the past three months have witnessed a more substantial 15.38% increase. This positive trajectory in stock price is particularly interesting when considering the company's valuation metrics. According to GuruFocus.com, Alcoa is currently modestly undervalued with a GF Value of $40.96, slightly down from the past GF Value of $41.22. This valuation suggests that the stock may still have room to grow, maintaining its status as modestly undervalued both currently and over the past three months.
Introduction to Alcoa Corp
Alcoa Corp operates as a vertically integrated aluminum company, holding the title of the world's largest bauxite miner and alumina refiner by production volume. The company's business model is intricately linked to the commodity prices within the aluminum supply chain, with its operations spanning across bauxite mining, alumina refining, and primary aluminum manufacturing. Alcoa's revenue is primarily generated from its Aluminum segment, with a significant portion of its sales coming from the United States. The company's strategic positioning within the industry and its comprehensive operations make it a key subject for investors' analysis.
Assessing Alcoa's Profitability
Alcoa's financial health can be gauged through various profitability metrics. The company's Profitability Rank stands at 5/10 as of September 30, 2023, indicating a moderate level of profitability within the industry. Its Operating Margin is currently at -2.79%, which is better than 41.36% of 856 companies in the Metals & Mining sector. When it comes to return on equity, Alcoa's ROE is at -18.29%, surpassing 48.07% of 2,484 companies. The company's ROA is -6.22%, which is more favorable than 66.73% of 2,690 companies, and its ROIC stands at -3.33%, outperforming 76.78% of 2,657 companies. Over the past decade, Alcoa has managed to achieve profitability in 3 years, which is better than 59.35% of 1,203 companies in the industry.
Growth Prospects of Alcoa Corp
Alcoa's growth potential is reflected in its Growth Rank of 3/10. The company's 3-Year Revenue Growth Rate per Share is 6.80%, which is better than 37.18% of 589 companies in the Metals & Mining sector. However, the 5-Year Revenue Growth Rate per Share is a modest 0.20%, surpassing 27.13% of 516 companies. Looking ahead, the Total Revenue Growth Rate (Future 3Y To 5Y Est) is estimated at -0.36%, which is still better than 24.68% of 158 companies. These figures suggest that while Alcoa has demonstrated some growth, its future prospects may be more subdued.
Key Shareholders in Alcoa Corp
Alcoa's shareholder base includes notable investors who have significant stakes in the company. Ken Fisher (Trades, Portfolio) leads the pack with 2,814,015 shares, representing 1.58% of the company. Jeremy Grantham (Trades, Portfolio) holds 1,114,239 shares, accounting for 0.62%, while Jim Simons (Trades, Portfolio) owns 825,500 shares, equating to 0.46%. These investors' involvement in Alcoa underscores the company's appeal to seasoned market participants.
Competitive Landscape
When compared to its competitors, Alcoa stands out with its $6.01 billion market cap. Its closest competitors include Constellium SE (CSTM, Financial) with a market cap of $2.94 billion, Kaiser Aluminum Corp (KALU, Financial) at $1.14 billion, and Century Aluminum Co (CENX, Financial) with a market cap of $1.2 billion. Alcoa's larger size may offer it certain advantages in terms of market presence and operational scale.
Conclusion
In summary, Alcoa Corp's recent stock performance has been impressive, with a 15.38% gain over the past three months. The company's current valuation suggests it is modestly undervalued, which may indicate potential for further growth. While Alcoa's profitability metrics show mixed results, its position as a leading bauxite miner and alumina refiner, along with its significant shareholder base, contribute to its standing in the industry. However, its growth prospects appear to be limited in the near future. Investors will need to weigh these factors against the backdrop of a competitive metals and mining sector to determine the long-term potential of Alcoa's stock.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
