Rate this post by selecting a number. 1 is the worst and 5 is the best.

Author Message   Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3944 Registered: 05-2011 Posted From: 24.164.46.35 Rating: N/A Votes: 0 Posted on Thursday, January 20, 2022 - 2:14 pm:    Alcoa rolling higher as strong aluminum market leads to EPS blowout (62.90 +3.27) Backed by a red-hot aluminum market that has seen prices of the commodity shoot higher by about 50% yr/yr, Alcoa (AA) posted one of its strongest earnings reports in recent history last night. With the stock having rallied by 35% since early December, an impressive showing was needed to meet the sky-high expectations. The company met that challenge, reporting quarterly records for adjusted net income and adjusted EBITDA, with revenue jumping by 38% yr/yr -- AA's highest growth rate in over five years. The good news doesn't end there. Based on AA's strong, upside guidance, which calls for 1Q22 adjusted net income to roughly match 4Q21 levels, it's clear that the company expects the robust market conditions to persist. Inflationary pressures, especially surrounding energy and raw materials, are expected to continue into FY22, but AA believes that high metal prices will largely offset those headwinds. Furthermore, AA's recent actions to shore up its production portfolio through plant shutdowns and facility divestitures have better positioned it to weather the rising costs. Below is a closer look at the company-specific and macroeconomic catalysts that fueled AA's quarterly performance: Since implementing a multi-year review of its operating assets in October 2019, AA has achieved ~75% of its 1.5 mln metric ton goal in its smelting portfolio assessment. Resulting actions include the closing of AA's facility at Wenatchee Works in Washington and a two-year curtailment for the San Ciprián aluminum smelter in Spain. The closure or idling of less efficient plants has generated over $1.0 bln in capital over the past few years, enabling AA to pay down debt, reinstate its dividend, and authorize a $500 mln share repurchase program. Global demand for aluminum products is quite healthy, driven by strong construction and housing markets, rising new vehicle production (especially for electric vehicles), and government sponsored infrastructure projects. On the supply side, aluminum inventories have crept higher lately, but they remain at historically low levels. China plays a major role in the more limited supply because it has cut back production to reduce carbon emissions. The main takeaway is that the same bullish dynamics that drove AA's resurgence early in 2021 bolstered its results in Q4, leading to a blowout on the bottom line. Buoyed by a favorable supply and demand environment, the outlook is bright for AA, although geopolitical and monetary policy risks are threatening in the background.