Alcoa (AA, $20.83) shares get bumped up to outperform by Credit Suisse, on restructuring plans and expected profit boost
Shares of Alcoa climbed around +6% Wednesday, following a rating upgrade by Credit Suisse.
Analysts at Credit Suisse raised their rating on the aluminum products and wrap maker’s stock to outperform from neutral. They also hiked their price target on the shares to $27 from $26.
Credit Suisse analyst Curt Woodworth indicated that he expects alumina prices to bounce back on "significant" capacity cuts in China, the ending of inventory destocking, and the reported shutdown of the Alpart plant by Chinese Jiuquan Iron & Steel.
Woodworth also believes that raw material inputs for alumina, like caustic soda, energy, and calcined coke are declining in price and therefore boosting profit margin for Alcoa.
Woodworth also mentioned that Alcoa's restructuring efforts should result in significant tailwinds to its mid-cycle free cash flow starting early 2020. On Monday, Alcoa announced its restructuring plan that will eliminate at least one of its units, consolidate sales and lower costs, and downsize its executive team to seven department heads from 12 that report to the CEO. Woodworth predicts that Alcoa’s restructuring will lead to potential savings of $60-80 million, and he expects the company to quantify the impact this quarter.
Alcoa shares appear "significantly undervalued on most metrics" , Woodworth noted.
AA sees MACD Histogram crosses below signal line
AA saw its Moving Average Convergence Divergence Histogram (MACD) turn negative on May 26, 2023. This is a bearish signal that suggests the stock could decline going forward. Tickeron's A.I.dvisor looked at 42 instances where the indicator turned negative. In of the 42 cases the stock moved lower in the days that followed. This puts the odds of a downward move at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on May 22, 2023. You may want to consider selling the stock, shorting the stock, or exploring put options on AA as a result. In of 88 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AA declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for AA entered a downward trend on May 30, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Bullish Trend Analysis
The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where AA's RSI Oscillator exited the oversold zone, of 34 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 4 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where AA advanced for three days, in of 283 cases, the price rose further within the following month. The odds of a continued upward trend are .
AA may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.244) is normal, around the industry mean (1.521). P/E Ratio (7.319) is within average values for comparable stocks, (12.880). AA has a moderately low Dividend Yield (0.012) as compared to the industry average of (0.045). P/S Ratio (0.496) is also within normal values, averaging (757.899).
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating slightly worse than average price growth. AA’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. AA’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 83, placing this stock worse than average.
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a miner of bauxite and aluminum
Industry Aluminum
AA and
Correlation & Price change
A.I.dvisor indicates that over the last year, AA has been closely correlated with CENX. These tickers have moved in lockstep 81% of the time. This A.I.-generated data suggests there is a high statistical probability that if AA jumps, then CENX could also see price increases.
