Aluminum maker Alcoa (NYSE:AA) began the fourth-quarter earnings season on a high note, showing strong revenue growth and giving a positive outlook that points to a strong global economy.
The Details
Alcoa’s Q4 revenue reached $5.99 billion. This was more than 4% better than the $5.74 billion estimate the analyst community gave. The company did fall behind on earnings, though — Alcoa posted a 3-cents-per-share loss for the quarter, a penny worse than analysts’ expectations.
Despite the earnings loss, Alcoa’s outlook brightened its forecast for the coming year. The company expects demand for aluminum to grow 7% in 2012, along with a global deficit in supply for the year. Company officials explain that Alcoa is still 6.5% ahead of the required rate it will take to see global aluminum demand double between 2010 and 2020.
The report also revealed that aluminum demand grew 10% in 2011, preceded by 13% growth in 2010. At this continued rate of growth demand is well on its way to doubling by 2020, signaling a steady growth opportunity for Alcoa and others in its industry.
AA rose over 1% in early morning trading following the release of its earnings report.
Market Reaction
As the first company out of the gate, Alcoa’s earnings announcement often sets the tone for each earnings season. Wall Street and investors use it as a benchmark to prepare for the reports that flow out in the following weeks.
This time around, Wall Street has had a bullish reaction to Alcoa’s report — even though it didn’t completely sweep analysts’ estimates. In conjunction with encouraging Chinese trade data, Alcoa’s mostly positive report jump-started the markets. The Dow was up over 100 points during Monday mornings trading, while the S&P rose more than 15 points and the Nasdaq was up 34.
Both the Dow and S&P hit their highest intraday trading levels in five months.
In addition to the overall market, Alcoa’s report brought good news to the commodities sector. The materials sector led the S&P yesterday morning with over 2% in gains. And with news that China’s copper imports increased 12.6% in December, copper prices soared over 3%.
It’s clear that the market is ready for a rally. With Alcoa’s report and earnings season now under way, we’re seeing the beginnings of a positive market push. Get ready for bullish sentient to take over and for the markets to take off.
Click here for other notable earnings announcements this week.
