CENX vs. AA: Which Aluminum Stock is the Better Pick Now?

Core Insights - Century Aluminum Company (CENX) and Alcoa Corporation (AA) are significant players in the aluminum industry, with elevated aluminum prices amid global economic uncertainty and trade tensions making them attractive for investors [1] - The demand for aluminum is rising due to its applications in lightweight electric vehicles, recycled materials, and aircraft production, driven by sustainability trends [2] Group 1: Century Aluminum (CENX) - Century Aluminum is experiencing strong global demand for aluminum, supported by improving industrial activity and steady consumption across key markets [4] - The company operates primary aluminum smelters in the U.S. and Iceland, with a combined annual production capacity of approximately 770,000 tons, and produced about 638,000 tons in 2025 [5] - CENX is working to restore curtailed capacity at the Mt. Holly smelter, with plans to return to full production by mid-2026, and has secured an electricity supply agreement through 2031 [5][6] - The company owns a 55% stake in a bauxite mining and alumina refining joint venture in Jamaica, ensuring a steady supply of alumina [6] - CENX is implementing strategies to reduce costs and conserve cash, with cash and cash equivalents of $134.2 million at the end of Q4 2025 [7] - The Zacks Consensus Estimate for CENX indicates a 29.4% sales growth and over 100% EPS growth for 2026 [9][16] - Century Aluminum shares have increased by 160.8% over the past year, and the company is trading at a forward P/E ratio of 7.13X, below its five-year median [18][20] - Overall, CENX is benefiting from robust aluminum demand, favorable pricing trends, and disciplined cost management, making it a strong investment option [22][23] Group 2: Alcoa Corporation (AA) - Alcoa is positioned to benefit from rising aluminum prices due to geopolitical tensions affecting supply, particularly in the Middle East [8] - The company has seen increased demand and production capacity, with projections for its Aluminum segment to produce 2.4-2.6 million tons in 2026 [11] - The Alumina segment is also performing well, although the closure of the Kwinana refinery has impacted production volumes [12] - Alcoa's costs have risen, with a 6% increase in the cost of sales and a 9% increase in selling, general, and administrative expenses in 2025 [14] - The company has a high debt level of $2.44 billion, which raises concerns about its financial health despite cash and cash equivalents of $1.6 billion [15] - The Zacks Consensus Estimate for AA indicates a 10.9% sales growth and 56% EPS growth for 2026 [16] - Alcoa shares have gained 87.9% over the past year, with a forward P/E ratio of 9.82X, also below its five-year median [18][20] - Despite strong demand and production capacity, rising costs and high debt levels are significant concerns for Alcoa's profitability [23]