Alcoa’s Estimates Cut at Dahlman Rose on Weak Aluminum Prices, but Still a “Buy” (AA)

Aluminum producer Alcoa Inc. (AA) on Tuesday received some mixed commentary from analysts at Dahlman Rose.

The firm lowered its second quarter earnings estimates for AA from 7 cents per share on $640 million in revenue, to 3 cents per share on revenue of $550 million. Dahlman Rose maintained its “Buy” rating and $14.65 price target, however, which suggests a massive 70% upside to the stock’s Monday closing price of $8.63.

A Dahlman Rose analyst commented, “We are lowering our 2Q12 estimates to reflect recent LME aluminum price declines and believe that consensus estimates still need to come down. While we are encouraged by recent downstream performance, the company’s upstream business should continue to weigh on the shares amid depressed LME prices.”

Alcoa shares rose 20 cents, or +2.4%, in morning trading Tuesday.

The Bottom Line
Alcoa currently offers a 1.39% dividend yield, based on last night’s closing price of $8.63 and the company’s annualized dividend payout of 12 cents per share.

Alcoa Inc. (AA) is not recommended at this time, holding a DARS™ Rating of 2.9 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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