Alcoa as an alternative to rusale

Alcoa (#aa) is an American metallurgical company and ranks second in the world of aluminum smelting, yielding only to our Rusal. But unlike our companies, American is much lower than the risks associated with government policies and intervention in business affairs. Therefore, it is quite logical that investors are looking for alternative ways to make money on aluminum growth, including through the purchase of alcoa shares.

For the second quarter, Alcoa received a revenue of $ 2.83 billion, which is 31.9% more than a year earlier. Naturally, the low base of last year is influenced by such growth and the rise in commodity market prices. Adjusted earnings amounted to $ 281 million, against a loss of $ 4 million in 2020. Profit per share was released $ 1.49, it is better than the consensus forecast of analysts at $ 1.35

If you look at the aluminum quotation, you can see that the price is relative to 2020 and even 2019 significantly increased. If you look at the year-to-year, the growth was 55.5% from $ 1690 to $ 2624 per ton on the London Metal Exchange. Technically, in the short term, there is a possibility that growth will continue.

📊 Is the evaluation is adequate now? Capitalization of Alcoa is now $ 7.5 billion. If you look at the profit over the past 12 months, we will see $ 431 million. We obtain that the business will pay off for this level of profit in 17.5 years. However, it must be remembered that in 2020 there was a low base and prices for aluminum, and the TTM calculates 3Q0 and 4QV20. Profit for 3Q21 and 4KV21 is very likely to be higher than g / g, therefore, the annual profit will be higher.

The forecast of analysts for profits next year is $ 4.74 per share that at current prices gives Forward P / E equal to 8.5. This indicator is lower than the average for the American market, however, it must be borne in mind that this is a commodity company, therefore the assessment is reduced by greater risk. On the other hand, current prices, despite the rapid growth, look adequately, therefore, if you put, to continue the growth of aluminum, the Alcoa is quite a suitable chip.

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