Why Alcoa Stock Soared by Almost 13% on Thursday
Key Points
The aluminum producer has found an effective way to cope with tariffs.
Investors responded positively to this, especially because it positively affected third-quarter fundamentals.
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A double miss on quarterly analyst estimates usually pushes a stock's price down, but that wasn't the case with Alcoa (NYSE: AA) on Thursday. Despite the twin whiffs the company posted in its third quarter, market players were encouraged by management's strategy to cope with a major challenge in the aluminum industry.
With that, Alcoa's shares closed the day nearly 13% higher in price. This compared very well to the 0.6% increase of the bellwether S&P 500 (SNPINDEX: ^GSPC).
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A dip into the red
Just after the market closed on Wednesday, Alcoa unveiled third-quarter financials. These showed that revenue inched up by 3% on a year-over-year basis to a shade under $3 billion. Net loss not in accordance with generally accepted accounting principles, or GAAP, was $6 million ($0.02 per share). That represented a flip from the $135 million profit of third quarter 2024.
Image source: Getty Images.
Analysts were expecting Alcoa's adjusted bottom line to land in profit, to the tune of $0.02 per share. The company also missed the pundit consensus revenue estimate of over $3.1 billion.
Rolling with the punches
However, in its earnings release, Alcoa wrote that the Midwest premium it earned on U.S. aluminum production more than offset the negative effect of tariffs and other costs on aluminum imports. Specifically, it pointed to shipments from its smelters located in Canada to U.S. clientele.
Tariffs are a major concern across the broader metallurgy sector, so the company's apparent resilience in the face of them boosted investor sentiment. Those folks might not be so forgiving if Alcoa doesn't return to adjusted profitability before long, though.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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