Alcoa Q4 Earnings on the Deck: How to Approach the Stock Now?

Alcoa Corporation AA is scheduled to release fourth-quarter 2025 results on Jan. 22, after market close. The Zacks Consensus Estimate for earnings is currently pegged at 95 cents per share on revenues of $3.24 billion.Fourth-quarter earnings estimates have increased 18.8% over the past 60 days. However, the bottom-line projection indicates a decrease of 8.7% from the year-ago number. Also, the Zacks Consensus Estimate for quarterly revenues indicates a year-over-year decline of 7%.AA’s Earnings Surprise HistoryImage Source: Zacks Investment ResearchAlcoa has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 39.3%. In the last reported quarter, it delivered an earnings surprise of 86.7%.Earnings Whispers for AAOur proven model predicts an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks before they are reported with our Earnings ESP Filter.Alcoa has an Earnings ESP of +0.53% as the Most Accurate Estimate is pegged at 96 cents per share, higher than the Zacks Consensus Estimate of 95 cents. It sports a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Alcoa Price and EPS Surprise Alcoa price-eps-surprise | Alcoa QuoteFactors Driving Alcoa’s PerformanceAn increase in demand for products in the electrical and packaging end markets in North America and Europe, is expected to have benefited Alcoa’s Aluminum segment in the fourth quarter. Also, continued progress on the San Ciprián and the restart of the Spain smelter are likely to have aided the segment’s sales. For the fourth quarter, the Zacks Consensus Estimate for the Aluminum segment’s total sales is pegged at $2.45 billion, indicating a 29% rise from the year-ago reported number.Alcoa’s Alumina segment is expected to have benefited from an increase in production at the Australian refineries and the growing popularity of its Sustana line of products. However, the segment’s results are anticipated to put up a weak show due to lower shipments of alumina arising from the curtailment of the Kwinana refinery and decreased trading activity. The consensus mark for the Alumina segment’s total sales is pegged at $1.32 billion, indicating a 46% decline from the year-ago number.Nevertheless, synergistic gains from partnerships and acquisitions made by the company are expected to have boosted its performance. In March 2025, Alcoa and IGNIS EQT entered into a joint venture agreement to resume and improve the production capacity of its San Ciprian site. In August 2024, Alcoa acquired Alumina Limited. This acquisition bolstered its position as a pure-play and upstream aluminum company worldwide.Also, Alcoa's efforts to increase smelter and refinery capacity are likely to have supported its results in the to-be-reported quarter.However, the escalating cost of sales due to higher input costs poses a threat to Alcoa’s bottom line. Also, given the company’s extensive geographic presence, its operations are subject to global political risks and foreign exchange headwinds. A stronger U.S. dollar is likely to have hurt AA's overseas business in the to-be-reported quarter.AA Price PerformanceAlcoa’s shares have surged 54.2% in the past three months compared with the Zacks Metal Products - Distribution industry’s 49.9% growth. The company’s shares have also fared better than the S&P 500’s increase of 4.2%. Its peers, Constellium SE CSTM and Ryerson Holding Corp. RYI have gained 38.9% and 24.9%, respectively, in the same period.Three-Month Price PerformanceImage Source: Zacks Investment ResearchAlcoa’s Valuation Remains a TailwindAA’s valuation offers upside potential. The stock is trading at a forward 12-month price-to-earnings (P/E) ratio of 12.50X, slightly lower than the industry average of 12.82X. In comparison with Alcoa’s valuation, its peers, Constellium and Ryerson Holding, are trading higher. Constellium and Ryerson Holding are trading at 12.94X and 21.56X, respectively.Price-to-Earnings (Forward 12 Months)Image Source: Zacks Investment ResearchInvestment ThesisWith a comprehensive and diversified product portfolio, Alcoa has been benefiting from the growing popularity of lighter and energy-efficient electric vehicles, recycled aluminum and rechargeable batteries. The company’s strategic collaborations and strength in the electrical and packaging markets bode well for its fourth-quarter earnings.Its worth noting that in June 2025, the U.S. administration increased tariffs on imported aluminum to 50% as a measure to correct trade imbalances and boost the domestic industry. The move has increased aluminum prices, thereby benefiting domestic producers like Alcoa which is likely to drive itss performance in the quarters ahead.Should You Buy AA Now?Solid momentum across end markets, accretive acquisitions and synergistic gains from partnerships position Alcoa favorably for strong fourth-quarter results.With a positive analyst sentiment and robust growth prospects, Alcoa is well-positioned to deliver sustained growth and shareholder value. We believe that AA stock is an ideal candidate for an investor's portfolio addition.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Alcoa (AA): Free Stock Analysis Report Constellium SE (CSTM): Free Stock Analysis Report Ryerson Holding Corporation (RYI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks