Financial Analysis: Alcoa Corp. (AA) & Arconic (NASDAQ:ARNC)

Arconic (NASDAQ: ARNC) and Alcoa Corp. (NYSE:AA) are both mid-cap basic materials companies, but which is the better business? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.

Analyst Recommendations

This is a summary of current recommendations and price targets for Arconic and Alcoa Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arconic 1 4 4 0 2.33
Alcoa Corp. 0 5 14 0 2.74

Arconic currently has a consensus price target of $26.25, indicating a potential upside of 8.07%. Alcoa Corp. has a consensus price target of $39.07, indicating a potential upside of 3.46%. Given Arconic’s higher probable upside, research analysts clearly believe Arconic is more favorable than Alcoa Corp..

Profitability

This table compares Arconic and Alcoa Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arconic 6.50% 14.01% 4.33%
Alcoa Corp. 1.63% 3.29% 1.60%

Valuation & Earnings

This table compares Arconic and Alcoa Corp.’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Arconic $12.56 billion 0.85 $1.35 billion N/A N/A
Alcoa Corp. $10.38 billion 0.67 $1.60 billion N/A N/A

Alcoa Corp. has higher revenue, but lower earnings than Arconic.

Summary

Arconic beats Alcoa Corp. on 6 of the 9 factors compared between the two stocks.

Arconic Company Profile

Arconic Inc., formerly Alcoa Inc., is engaged in lightweight metals engineering and manufacturing. The Company operates through three segments: Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions. Its multi-material products, which include aluminum, titanium and nickel, are used around the world in markets, such as aerospace, automotive, commercial transportation and packaging. The Global Rolled Products segment produces a range of aluminum sheet and plate products for the aerospace, automotive, commercial transportation, brazing and industrial markets. The Engineered Products and Solutions segment develops and manufactures products for the aerospace (commercial and defense), commercial transportation and power generation end markets. The Transportation and Construction Solutions segment produces products that are used in the non-residential building and construction and commercial transportation end markets.

Alcoa Corp. Company Profile

Alcoa Corporation, formerly Alcoa Upstream Corporation, is engaged in the production of bauxite, alumina and aluminum of various cast and rolled products. The Company is engaged in the production and management of aluminum and alumina combined through its participation in various aspects of the industry, such as technology, mining, refining, smelting, and recycling. The Company’s segments include Bauxite, Alumina, Aluminum, Cast Products, Energy and Rolled Products. The Company’s Bauxite segment represents its global portfolio of bauxite mining assets. The Company’s Alumina segment represents its refining system across the world, and processes bauxite into alumina and sells it directly to internal and external smelter customers across the world. The Company’s Aluminum segment represents its smelter system across the world. Its Energy segment represents its portfolio of energy assets, with power production capacity of approximately 1,685 megawatts.

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