Alcoa's Solid Earnings Don't Make Tariff Math Easier for AA Stock

Core Viewpoint - Alcoa Corp. reported solid earnings with an EPS of $2.15, exceeding analysts' estimates by 24%, but its revenue of $3.37 billion fell short of the forecasted $3.58 billion, leading to a 3% decline in stock price [1] Financial Performance - Revenue for the first quarter was $3.37 billion, lower than the expected $3.58 billion [1] - Earnings per share (EPS) of $2.15 was over 360% higher than the negative EPS of $0.81 from the previous year [1] Guidance and Tariff Impact - Alcoa reaffirmed its existing guidance for aluminum and alumina despite anticipating a $100 million annual cost due to tariffs [2][3] - The company incurred approximately $20 million in costs from a 25% tariff on global aluminum imports and expects an additional $90 million in the upcoming quarter [2] Market and Operational Insights - CEO William Oplinger noted strong demand in the first quarter and a robust order book, allowing the company to maintain its guidance [3] - The U.S. imports over 4 million metric tons of aluminum, primarily from Canada, and would require significant investment and time to close its aluminum trade deficit [4][5] Stock Forecast and Analyst Ratings - The 12-month stock price forecast for Alcoa is $44.17, indicating an upside potential of 89.87% based on 12 analyst ratings [6] - Current stock price is $23.26, with forecasts ranging from a low of $25.00 to a high of $90.00 [6] Investment Considerations - The current tariff environment complicates recommendations for Alcoa stock as a Buy, although there is potential for a favorable shift in tariff policy [7] - Alcoa has made efforts to reduce net debt, which could enhance future capital returns, but the low dividend yield of $0.40 per share may deter long-term investors [8]