Alcoa: Meet, Miss or Beat?

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There are some investors who think the significance of aluminum company Alcoa’s earnings is overblown. There are stocks that provide a better measure of consumer spending habits, or otherwise give more insight into the economy’s health.   

 

But because Alcoa is always the first major company to report, it’s numbers are still treated like an omen for the 499 companies on the S&P 500.  

 

So, if you ignore one-time charges, Alcoa (NYSE:AA) reported $0.10 a share 1st Quarter profit yesterday afternoon. I would swear I read on Yahoo! Finance that analysts were expecting $0.11 a share. That would mean Alcoa missed estimates.   

 

Then last night, Reuter’s reported analyst expectations were for $0.10 a share in earnings, which would mean Alcoa matched estimates.  

 

But THEN, the Financial Times said that the real per share earnings expectation was $0.09. So Alcoa actually beat the number.  

 

Frankly, I have no idea whether Alcoa, missed, met or beat earnings expectations. 

 

Is business at Alcoa good, bad, or somewhere in the middle? I’m pretty sure there won’t be middle-ground from investors. They will either like the news or not. Stocks will either rise or fall.   

 

All of a sudden, Alcoa’s earnings seem pretty important. 

 

Asian stocks were off last night. And futures for the S&P 500 were down, too. Maybe they figured out that Alcoa’s 1st Quarter revenues fell short of expectations, coming in at $4.89 billion when the analysts hoped it would be more like $5.23 billion. (After all, aluminum prices are 57% higher than they were a year ago.)  

 

Even if Alcoa isn’t influential enough to start a full stock market correction, there is one thing that about its earnings that should resonate with investors…   

 

Over the last week or so, analysts and market strategist-types have been increasingly wondering if the recent rally needs to see really good earnings to continue higher.   

 

Alcoa’s revenue miss has to add to the earnings anxiety.   

 

Last Quarter, the S&P 500 was within 1 point of its year-to-date highs when Alcoa 4th 2009 Quarter earnings report on January 11. The correction started 5 trading days later, on Tuesday, January 19.   

 

If only it were so easy, we could pinpoint the timing of the next correction. We could take a big short position next Monday, and then when the market starts selling off on Tuesday, exactly 5 days after Alcoa’s earnings, we’ll make a bundle.   

 

The recent rally has come with light volume and virtually no sell-offs. In other words, the institutional investors have been doing their jobs. But where is the individual investor?   

 

Mutual fund inflows suggest that individual investors have been slow to put money back into the U.S. stock market. Bond funds and emerging market funds have been much more popular with investors.   

 

It’s hard to blame investors for being a little gun-shy after the events of 2008 and 2009. But if the market’s performance over the last year hasn’t gotten the skeptics back into the market, one wonders what will do the trick.   

 

One of the biotech stocks TradeMaster Jason Cimpl highlighted recently in a Special Opportunity Report is up 165% today on positive data from a drug trial. That’s a great move, and the other stock in his report could do just as well or better in the days and weeks ahead.   

 

You can access that report HERE. 

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