As I write this, shares of Alcoa Inc (NYSE:AA) are falling after the aluminum maker reported its operating results for the first quarter.
The aluminum producer swung to a profit last quarter, reporting net income of $195 million, compared with a net loss of $178 million in Q1 2014. Excluding special items, adjusted net income was $363 million or 28 cents per share, which beat analysts’ estimates of 26 cents per share.
However, Alcoa missed top-line expectations. Compared with Q1 2014, revenues rose just 7% to $5.82 billion. Analysts were looking for revenue of $5.94 billion.
The fact is that, as a multinational company, Alcoa receives much of its revenue in foreign currencies. And with many of the world’s currencies declining against the dollar, Alcoa is getting less “bang for its buck,” when it converts those international sales back into dollars.
So, while Alcoa revised its 2015 outlook (now expecting 9% global aluminum demand growth), AA stock’s sales and earnings growth is expected to slow over the next several quarters. For fiscal year 2015, AA is expected to post just 3.7% sales growth and 15.2% earnings growth.
It’s going to be an uphill battle for Alcoa to maintain its previously rapid growth rate, and investors are finally realizing it. I consider AA a C-rated Hold.
Now that earnings season has officially began, it’s going to be a busy time for company updates. Stay tuned to make sure you’re all caught up.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
