Alcoa Surges 65.4% in 3 Months: Is the Stock Still Worth Buying?

Core Insights - Alcoa Corporation (AA) shares have increased by 65.4% over the past three months, outperforming the industry growth of 59.9% and the S&P 500's growth of 3.8% [1][8] - The stock closed at $63.15, below its 52-week high of $66.95 but significantly above its 52-week low of $21.53, indicating strong market sentiment and confidence in the company's financial health [3] Business Performance - The Aluminum segment is experiencing strong demand, particularly in electrical and packaging markets, with production increasing by 5% year-over-year to 2,319 kilo metric tons in 2025 [11] - Alcoa's Alumina segment is benefiting from improved productivity, although the closure of the Kwinana refinery has impacted production and shipment volumes [13] - The company expects aluminum production in 2026 to be between 2.4-2.6 million tonnes, with shipments anticipated to be in the range of 2.6-2.8 million tonnes [12] Market Dynamics - Increased demand for aluminum is driven by the rise in electric vehicles, rechargeable batteries, and the recovery in air travel, which has led to higher production needs from aircraft manufacturers [9] - The U.S. administration's decision to increase tariffs on imported aluminum to 50% has positively impacted domestic producers like Alcoa by raising aluminum prices [10] Strategic Initiatives - Alcoa is focused on acquiring new assets to enhance organic growth, exemplified by its acquisition of Alumina Limited in August 2024, which strengthens its position in the bauxite and alumina markets [14] - The company is also collaborating with stakeholders to expand production capacities, which is expected to support top-line performance [20] Financial Outlook - Alcoa's forward 12-month price-to-earnings ratio is 12.72X, in line with the industry average, and lower than peers Olympic Steel and Constellium [15] - Earnings estimates for 2026 have increased by 38.5% to $5.18 per share, while estimates for 2027 have risen by 27.4% to $5.26 per share over the past 60 days, reflecting positive analyst sentiment [19][20]