Alcoa Inc.AA

Morningstar Rating

Stock Research and Analysis

by Min Ye

Alcoa is gradually reshuffling its portfolio to focus more on the upstream bauxite mining and refinery business, and de-emphasize the downstream production business. Given the more attractive economics of the mining and alumina refining operations, Read more

Bulls Say

The industrialization of emerging-market countries will increase demand for aluminum over the long haul. This should support aluminum prices in the long run.

Alcoa is an undisputed leader in alumina production, an area that has some competitive advantage and thus attractive returns.

New CEO Klaus Kleinfeld comes to Alcoa with an impressive resume and penchant for getting the most out of underperforming businesses. Read more

Bears Say

Aluminum consumption is highly sensitive to macroeconomic activities. Consumption is currently destroyed with a global economic slowdown. Weakness in the automotive sector is expected to be a drag on the company's near-term operating performance.

Smelting capacity in China was brought on line too fast and created an overcapacity situation. It takes time for the industry to shake out and for supply and demand to rebalance.

At times of high aluminum prices, the company had struggled with high input costs and thus realized suboptimal profits.

Alcoa continues to struggle with turning around its Russian operations. Performance in that plant could affect overall results.

The majority of the aluminum used in autos and beverage cans is recycled and turned into new aluminum, which increases the aluminum stock on earth over time. Read more

Strategy

Alcoa's strategy is to focus its growth on its "upstream" business in bauxite mining and refining. The company is in various stages of development or negotiation in countries including Australia, Brazil, Read more

Management

Klaus Kleinfeld was elected CEO in May 2008 after a brief stint as the COO with Alcoa. Prior to joining Alcoa, Kleinfeld spent a 20-year career with Siemens AG SI, where he built a successful track record. We like the fact that equity-based compensation Read more

Profile

Alcoa created the aluminum industry a century ago and introduced many applications of aluminum to the modern world. It is currently one of the world's largest alumina refiners Read more

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