Alcoa Corporation (AA) Buy or Sell Stock Guide

Last updated: Last Wednesday

Are you looking for the analysis of Alcoa Corporation (AA) stock? Are you wondering what the bulls and the bears say about it?

If so, you came to the right place. In this stock guide, we will share with you 7 reasons to buy and 6 reasons to sell AA stock. You’ll get a perspective on what the bulls and the bears say about it.

The analysis below may be also helpful to you if you have any of the following questions about AA stock:

  • Is AA a buy or a sell?
  • Should I sell or hold AA stock today?
  • Is AA a good buy / investment?
  • What are AA analyst opinions, recommendations and ratings?

Let’s start with the bull case. Here are the reasons to buy AA stock:

1. Aluminum demand and pricing are poised to recover from cyclical lows, thereby driving significant earnings growth potential for Alcoa.

2. Alcoa’s commodity-facing operations have each improved their cost position in recent years.

3. Alcoa’s outlook should improve as the global economy gradually recovers, as reflected by higher global GDP growth.

4. AA forward P/E ratio is 14.98, and it’s low compared to its industry peers’ P/E ratios. See AA forward P/E ratio chart.

5. AA PEG ratio (P/E adjusted for growth) is 2.85, and it’s low compared to its industry peers’ PEG ratios. See AA PEG chart.

6. AA average analyst rating is Buy. See AA analyst rating chart.

7. AA average analyst price target ($25.18) is above its current price ($19.16). See AA price target chart.

Now that you understand the bull case, let’s look at the reasons to sell AA stock (i.e., the bear case):

1. Aluminum prices will move sharply lower into the future, weighing heavily on companywide profitability.

2. Overcapacity will remain a material headwind to aluminum price appreciation, driven largely by massive low-cost capacity additions in China.

3. The new Alcoa houses the less attractive assets from the legacy Alcoa business and might not appeal to long-term oriented investors.

4. AA quarterly revenue growth was -24.30%, lower than the industry and sector average revenue growth (3.34% and 1.47%, respectively). See AA revenue growth chart.

5. AA profitability is declining. The YoY profit margin change was -0.17 percentage points. See AA profitability chart.

6. AA short share of float is 6.05%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See AA short share of float chart.

Now let's look at the key statistics for AA:

Metrics AA
Price $21.54
Average Price Target / Upside $25.18 / 16.93%
Average Analyst Rating Buy
Industry Aluminum
Sector Basic Materials
Number of Employees 14,000
Market Cap $3.56B
Forward P/E Ratio 14.98
Price/Book Ratio 0.29
PEG 2.85
Revenue (TTM) $12.16B
YoY Quarterly Revenue Growth -24.3%
Profit Margin -4.76%

What are your thoughts on AA?

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