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

Core Viewpoint - Alcoa Corporation is set to report its fourth-quarter 2025 results on January 22, with earnings estimates showing an 18.8% increase over the past 60 days, but a projected decline of 8.7% year-over-year in earnings and a 7% decline in revenues [1][7]. Earnings Estimates - The Zacks Consensus Estimate for earnings is currently at 95 cents per share, with revenues expected to be $3.24 billion [1]. - The earnings surprise history shows that Alcoa has consistently outperformed estimates, with an average surprise of 39.3% over the last four quarters [2]. Earnings Prediction - Alcoa has an Earnings ESP of +0.53%, with the Most Accurate Estimate at 96 cents per share, indicating a favorable outlook for an earnings beat [4][3]. Segment Performance - The Aluminum segment is projected to see total sales of $2.45 billion, reflecting a 29% increase year-over-year, driven by demand in electrical and packaging markets [5]. - Conversely, the Alumina segment is expected to report total sales of $1.32 billion, indicating a 46% decline from the previous year due to lower shipments and trading activity [6]. Strategic Developments - Recent partnerships and acquisitions, including a joint venture for the San Ciprián site and the acquisition of Alumina Limited, are expected to enhance Alcoa's production capacity and market position [8][5]. Market Performance - Alcoa's shares have increased by 54.2% over the past three months, outperforming both the Zacks Metal Products - Distribution industry and the S&P 500 [10]. Valuation Metrics - The stock is currently trading at a forward P/E ratio of 12.50X, slightly below the industry average of 12.82X, suggesting potential upside [13]. Investment Thesis - Alcoa's diversified product portfolio and strategic collaborations position it well for growth, particularly in the context of increasing demand for energy-efficient products and the impact of higher tariffs on aluminum imports [15][16].