Alcoa (AA) is a global leader in aluminum production. Based in Pittsburgh, it has a global reach with facilities in Brazil, Canada, Australia, and Western Europe. It is an end-to-end aluminum company with mining interests and smelters.
What Do I Need to Know About Alcoa Stock Historically?
Founded in 1888, Alcoa started trading on the New York Stock Exchange on Nov. 1, 2016. This IPO occurred after splitting from its parent company. The initial offering started at $21 per share. It steadily rose to $60 a share by April 20, 2018. Then it plunged to $5.48 on March 20, 2020.
Alcoa stock reached its peak at $91.96 in late March of 2022. That occurred when Australia banned exporting aluminum and alumina to Russia in wake of its invasion of Ukraine.
What Do I Need to Know About Alcoa Stock Now?
Since that peak three years ago, Alcoa stock has lost around 60% of its value. These days it trades north of $30 per share.
Part of the reason for the decline is that aluminum prices came back down from their all-time high of $4,000 per metric ton while aluminum is trading around $2,580 now thanks in part to volatile energy costs. Extracting aluminum takes a lot of energy. Rising energy prices affected Alcoa’s bottom line.
Analysts see it rebounding in the next couple of years but whether it can climb back to $90 is quite uncertain.
What Do I Need to Know About Alcoa Stock Versus Its Competitors?
Some of Alcoa’s competitors have fared better since March 2022. Century Aluminum (CENX) is down 33% and trading at $18.91 a share. Kaiser Aluminum (KALU) is lower by 28% and trading at $67.39. Rio Tinto, a main rival in global aluminum, trades at $76 a share. Its lowest valley over the past three years was $54 a share in October 2022.
Investors can look to Alcoa as a value stock compared to some rival companies. However, it might not generate the earnings you’d expect. But Alcoa’s dividends are consistent.
What Do I Need to Know About Alcoa Stock Declining From Its High?
The decline in Alcoa stock is partly due to a shortfall in earnings and revenue.
EBITDA fell from $2.2 billion in 2022 to $536 million in 2023. However, that rebounded to $1.6 billion in 2024. Management’s Q4 2024 earnings report announced that EBITDA would be favorable in 2025.
Revenue dropped 15% from 2022 to 2023. The lower performance was mostly because of year-over-year reduced average realized prices for aluminum and alumina. Higher production costs also chipped away at revenue. In 2024, the top line increased to $11.9 billion, up from $10.55 billion the year before. That was a gain of 12.8%. So, Alcoa is in a much healthier position than previously.
Analysts forecast the share price will rise in 2025 and 2026.
What Do I Need to Know About Alcoa Stock’s Rise Over the Past Year?
Alcoa stock is up 35% from early 2024 into Q1 2025. By mid-February 2025, the aluminum company outperformed the rest of its industry. Stocks of aluminum companies rose collectively 11.9% over that same period. The S&P 500 rose by 23.2%.
Stocks from two rivals, Constellium SE and Olympic Steel, didn’t fare as well as Alcoa. Both of those stocks lost around 50% of their value.
The rising stock for Alcoa happened because of increased demand for aluminum in North America and Europe. It can leverage major facilities and infrastructure on both continents to supply customers with aluminum casts for manufacturing.
2024 was a great year for Alcoa’s infrastructure improvements. The company increased production from smelters that came back online, introduced new products such as more eco-friendly aluminum, and acquired Alumina Limited in August 2024 to expand its offerings.
Alcoa’s position has strengthened in key markets. It also has greater flexibility moving forward.
What Do I Need to Know About Alcoa Stock Dividends and Earnings in 2025?
Income investors love companies that pay dividends regularly, and Alcoa certainly does that. Alcoa has steadily paid out dividends of 40 cents a share per year since October 2021.
Earnings have been hit or miss for Alcoa since late 2023. In Q4 2023, earnings per share were red to the tune of 84 cents. The subsequent quarter saw a loss of $1.41. Q4 of 2024 rebounded to a positive 76 cents EPS. The consensus EPS for Q1 2025 is $1.34.
What Is the Outlook for Alcoa’s Business Model in the Coming Years?
Analysts see positive numbers for Alcoa in 2025 and 2026, not least because smelters are coming back online.
There are some environmental regulations Alcoa is contending with in Western Australia and management does have some concerns about tariffs. However, Alcoa is seeking an exemption for its Canadian imports to the United States.
Alcoa expects to ship between 2.6 and 2.8 million tons of aluminum in 2025, up from the 2.59 million tons from 2024. Prices of aluminum are expected to rise by 6.3% to $2,573.50 per metric ton according to 33 analysts. The target price is expected to reach $2,626 per metric ton in 2026 on higher demand but tighter supply.
As an investment, aluminum is seen as better than copper and nickel at the moment. Increasing adoption of electric vehicles worldwide as well as new construction are driving increased demand for aluminum from 2025 and moving forward.
Other factors include the manufacturing of new airplane fuselages as global demand for air travel picks up. Environmentally friendly and energy-efficient production are priorities for the industry while trying to remain cost-effective and competitive.
Aluminum scrap recycling is also part of Alcoa’s business model. The market forecast for that is expected to increase from 38 million metric tons in 2024 to 57 million metric tons in 2030, a compound annual growth rate of 7%. The automotive industry is seen as the largest purveyor of scrap aluminum as it seeks cost-effective ways to build EVs.
Should I Buy Alcoa Stock?
Yes, you should buy Alcoa stock according to analysts because 8 out of 12 analysts rate it as a Buy, with an average price target of $50.17.
A 12-month price-to-earnings ratio is about 8.38x. Alcoa is also a cheaper buy compared to some of its rivals and peers.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.
