Alcoa (NYSE:AA) Corporation AA yesterday provided an update on its second-quarter 2020 results. Also, in a separate press release, it announced the pricing of $750 million worth of senior notes offering.
It is worth mentioning here that the company’s share price declined 1.25% yesterday, ending the trading session at $11.09.
Inside the Headlines
As noted, Alcoa benefitted from cost-reduction measures and improved productivity in the second quarter. It expects second-quarter cash balance to be in excess of $950 million. Revenues for the quarter are expected to be $2.1-$2.175 billion, whereas it generated $2.4 billion in the first quarter of 2020.
Production activities in mining are anticipated to have grown 5%, while that in refining is expected to have increased 2% on a sequential basis. The production of primary aluminum is likely to grow 3% sequentially in the second quarter.
Adjusted earnings before interest, tax, depreciation and amortization in the quarter are expected to be $175-$190 million, suggesting a decline from $321 million in the previous quarter. Also, adjusted earnings per share are anticipated to be ($0.08)-$0.00, whereas it reported ($0.23) in the first quarter.
The company is slated to report its second-quarter 2020 results on Jul 15, 2020. The Zacks Consensus Estimate for its loss is pegged at 72 cents, reflecting a decline from 50 cents mentioned 60 days ago. The consensus estimate for revenues is pegged at $2.06 billion, suggesting a decline of 24.2% from the year-ago reported figure.
On the same day, Alcoa priced senior notes offerings by its wholly-owned subsidiary, Alcoa Nederland Holding B.V. The notes — to be guaranteed by Alcoa and some subsidiaries — carry a coupon rate of 5.500% and are due to mature in 2027. The offering is valid until Jul 13, 2020.
The proceeds raised from the offerings will be used by Alcoa Nederland Holding for satisfying general corporate purposes and enhancing cash balance.
Notably, Alcoa’s long-term debts were $1,801 million at the end of first-quarter 2020, up from $1,799 million at the end of fourth-quarter 2019. Fresh issuances of debt instruments will increase the company’s debts and might inflate its financial obligations.
Zacks Rank, Earnings Estimates and Price Performance
Alcoa, with a market capitalization of $2.1 billion, currently carries a Zacks Rank #3 (Hold). In the past three months, the company’s shares have gained 49.7% compared with the industry’s growth of 14.3%.
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The Zacks Consensus Estimate for the company’s loss is pegged at $1.27 for 2020 and 42 cents for 2021, reflecting declines from loss of $1.18 and loss of 34 cents mentioned 60 days ago, respectively.
Alcoa Corp. Price and Consensus
Alcoa Corp. price-consensus-chart | Alcoa Corp. Quote
Stocks to Consider
Some better-ranked stocks in the Zacks Industrial Products sector are II-VI (NASDAQ:IIVI) Incorporated IIVI, AZZ (NYSE:AZZ) Inc. AZZ and Altra Industrial Motion (NASDAQ:AIMC) Corp. AIMC. While II-VI currently sports a Zacks Rank #1 (Strong Buy), both AZZ and Altra Industrial carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for II-VI and Altra Industrial improved for the current year, while have been unchanged for AZZ. Further, earnings surprise for the last reported quarter was 213.33% for II-VI, 4.44% for AZZ and 47.73% for Altra Industrial.
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Alcoa Corp. (AA): Free Stock Analysis Report
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