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Relative valuation derived from Materials sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 50GRADE C+
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
16.6%
Sector: 3.3%
Dividend Analysis audit
No Dividend
This company does not currently pay a dividend.
Analyst Projections
Analyst Consensus
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Based on our 6-factor quantitative model, Alcoa Corp (AA) receives a "Hold" rating with a composite score of 53.5/100, ranked #144 out of 4446 stocks. Key factor scores: Quality 50/100, Value 61/100, Momentum 71/100. This is quantitative analysis only — not investment advice.
Alcoa Corp (AA) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does Alcoa Corp Do?
Alcoa Corporation, together with its subsidiaries, produces and sells bauxite, alumina, and aluminum products in the United States, Spain, Australia, Iceland, Norway, Brazil, Canada, and internationally. The company operates through three segments: Bauxite, Alumina, and Aluminum. It engages in bauxite mining operations; and processes bauxite into alumina and sells it to customers who process it into industrial chemical products, as well as aluminum smelting and casting businesses. The company offers primary aluminum in the form of alloy ingot or value-add ingot to customers that produce products for the transportation, building and construction, packaging, wire, and other industrial markets. In addition, it owns hydro power plants that generates and sells electricity in the wholesale market to traders, large industrial consumers, distribution companies, and other generation companies. The company was formerly known as Alcoa Upstream Corporation and changed its name to Alcoa Corporation in October 2016. The company was founded in 1888 and is headquartered in Pittsburgh, Pennsylvania. Alcoa Corp (AA) is classified as a large-cap stock in the Materials sector, specifically within the Steel Works industry. The company is led by CEO Roy C. Harvey and employs approximately 13,100 people, headquartered in New York, Pennsylvania. With a market capitalization of $19.0B, AA is one of the prominent companies in the Materials sector.
Alcoa Corp (AA) Stock Rating — Hold (April 2026)
As of April 2026, Alcoa Corp receives a Hold rating with a composite score of 53.5/100 and 3 out of 5 stars from the Blank Capital Research quantitative model.AA ranks #144 out of 4,446 stocks in our coverage universe. Within the Materials sector, Alcoa Corp ranks #9 of 284 stocks, placing it in the top 10% of its Materials peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
AA Stock Price and 52-Week Range
Alcoa Corp (AA) currently trades at $73.03. The stock lost $0.24 (0.3%) in the most recent trading session. The 52-week high for AA is $68.40, which means the stock is currently trading 6.8% from its annual peak. The 52-week low is $21.53, putting the stock 239.2% above its annual trough. Recent trading volume was 3.2M shares, reflecting moderate market activity.
Is AA Overvalued or Undervalued? — Valuation Analysis
Alcoa Corp (AA) carries a value factor score of 61/100 in the Blank Capital model, indicating fair valuation relative to historical norms. The trailing price-to-earnings ratio is 18.97x, compared to the Materials sector average of 26.50x — a discount of 28%. The price-to-book ratio stands at 3.15x, versus the sector average of 2.83x. The price-to-sales ratio is 1.57x, compared to 0.74x for the average Materials stock. On an enterprise value basis, AA trades at 18.38x EV/EBITDA, versus 6.01x for the sector.
Overall, AA's valuation appears roughly in line with sector benchmarks, suggesting the market is pricing the stock fairly given its current fundamentals and growth trajectory. Neither deep value nor significantly overpriced, the stock occupies a middle ground on valuation.
Alcoa Corp Profitability — ROE, Margins, and Quality Score
Alcoa Corp (AA) earns a quality factor score of 50/100, indicating solid business quality with consistent operational execution. The return on equity (ROE) is 16.6%, compared to the Materials sector average of 3.3%, which is within a healthy range. Return on assets (ROA) comes in at 6.3% versus the sector average of 0.6%.
On a margin basis, Alcoa Corp reports gross margins of 10.0%, compared to 29.8% for the sector. The operating margin is 9.3% (sector: 6.0%). Net profit margin stands at 8.0%, versus 3.0% for the average Materials stock. Revenue growth is running at 3.1% on a trailing basis, compared to 1.8% for the sector. The overall profitability profile is adequate, though there may be room for margin expansion.
AA Debt, Balance Sheet, and Financial Health
Alcoa Corp has a debt-to-equity ratio of 40.0%, compared to the Materials sector average of 41.0%. The low leverage indicates a conservative balance sheet with significant financial flexibility. The current ratio is 1.44x, suggesting adequate working capital coverage. Total debt on the balance sheet is $2.44B. Cash and equivalents stand at $1.49B.
AA has a beta of 1.70, meaning it is more volatile than the broader market — a $10,000 investment in AA would be expected to move 70.0% more than the S&P 500 on any given day. The stability factor score for Alcoa Corp is 39/100, suggesting elevated price swings that may be unsuitable for conservative portfolios.
Alcoa Corp Revenue and Earnings History — Quarterly Trend
In TTM 2026, Alcoa Corp reported revenue of $12.29B and earnings per share (EPS) of $4.40. Net income for the quarter was $1.01B. Gross margin was 10.0%. Operating income came in at $1.18B.
In FY 2025, Alcoa Corp reported revenue of $12.83B and earnings per share (EPS) of $4.40. Net income for the quarter was $1.12B. Revenue grew 7.9% year-over-year compared to FY 2024. Operating income came in at $1.06B.
In Q3 2025, Alcoa Corp reported revenue of $3.00B and earnings per share (EPS) of $0.88. Net income for the quarter was $218M. Revenue grew 3.1% year-over-year compared to Q3 2024. Operating income came in at $167M.
In Q2 2025, Alcoa Corp reported revenue of $3.02B and earnings per share (EPS) of $0.63. Net income for the quarter was $151M. Revenue grew 3.9% year-over-year compared to Q2 2024. Operating income came in at $161M.
Over the past 8 quarters, Alcoa Corp has demonstrated a growth trajectory, with revenue expanding from $2.91B to $12.29B. Investors analyzing AA stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
AA Dividend Yield and Income Analysis
Alcoa Corp (AA) does not currently pay a dividend. This is common among growth-oriented companies in the Steel Works industry that prefer to reinvest cash flows into business expansion rather than returning capital to shareholders. Income-focused investors looking for Materials dividend stocks may want to explore other Materials stocks or use the stock screener to filter by dividend yield.
AA Momentum and Technical Analysis Profile
Alcoa Corp (AA) has a momentum factor score of 71/100, indicating strong price momentum with the stock outperforming the majority of the market over recent periods. Stocks with high momentum scores have historically tended to continue their outperformance in the near term. The investment factor score is 32/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 46/100 reflects moderate short selling activity.
AA vs Competitors — Materials Sector Ranking and Peer Comparison
Comparing AA against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full AA vs S&P 500 (SPY) comparison to assess how Alcoa Corp stacks up against the broader market across all factor dimensions.
AA Next Earnings Date
No upcoming earnings date has been announced for Alcoa Corp (AA) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy AA? — Investment Thesis Summary
Alcoa Corp presents a balanced picture with arguments on both sides. The value score of 61/100 suggests attractive pricing relative to fundamentals. Price momentum is positive at 71/100, suggesting the trend favors buyers. High volatility (stability score 39/100) increases portfolio risk.
In summary, Alcoa Corp (AA) earns a Hold rating with a composite score of 53.5/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on AA stock.
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Institutional Research Dossier
Alcoa Corp (AA) Deep Dive Analysis
Published on March 24, 2026
Action RatingHold
Sections
Executive Summary
We maintain our Hold rating on Alcoa Corp (AA). While the company exhibits attractive valuation metrics compared to its sector, particularly in P/E and EV/EBITDA, its volatile earnings history and negative free cash flow raise concerns about its financial stability and capital allocation efficiency. The cyclical nature of the aluminum industry, coupled with Alcoa's operational challenges, warrants a cautious approach, justifying the current Hold rating.
Alcoa's strategic focus on bauxite, alumina, and aluminum production positions it as a key player in the global aluminum supply chain. However, its profitability is highly susceptible to fluctuations in commodity prices and energy costs. The company's recent performance, marked by significant swings in net income and operating margins, underscores the inherent risks associated with its business model. While Alcoa's efforts to optimize its operations and reduce costs are commendable, the path to sustainable and consistent profitability remains uncertain, supporting our neutral stance.
Business Strategy & Overview
Alcoa Corporation operates across the aluminum value chain, from bauxite mining to alumina refining and aluminum smelting. This vertical integration aims to capture value at each stage of production, providing a degree of control over costs and supply. The company's strategy revolves around optimizing its asset portfolio, focusing on low-cost production, and delivering value-added products to its customers. Alcoa serves diverse end markets, including transportation, building and construction, and packaging, which helps to mitigate risk by diversifying its revenue streams.
A key aspect of Alcoa's strategy is its commitment to sustainability and responsible production. The company is investing in technologies to reduce its environmental footprint, including lowering greenhouse gas emissions and improving energy efficiency. This focus on sustainability not only aligns with global trends but also enhances Alcoa's reputation and strengthens its relationships with customers and stakeholders. Furthermore, Alcoa actively manages its energy costs through long-term power purchase agreements and investments in renewable energy sources, which are crucial for maintaining its competitiveness in the energy-intensive aluminum smelting process.
Alcoa's strategic positioning within the aluminum industry is both a strength and a weakness. While its integrated operations provide some insulation from market volatility, the company remains highly exposed to fluctuations in commodity prices and global economic conditions. The aluminum industry is characterized by intense competition, with players ranging from large multinational corporations to smaller regional producers. Alcoa's ability to differentiate itself through product quality, customer service, and technological innovation is essential for maintaining its market share and profitability.
The company's product pipeline focuses on developing advanced aluminum alloys and manufacturing processes that meet the evolving needs of its customers. This includes investing in research and development to create lighter, stronger, and more corrosion-resistant aluminum products for the automotive and aerospace industries. Alcoa also collaborates with its customers to develop customized solutions that address their specific requirements, fostering long-term partnerships and enhancing customer loyalty. The company's ability to adapt to changing market demands and technological advancements will be critical for its long-term success.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
3.1%
Sector: 1.8%
+75% VS SCTR
Economic Moat Analysis
Alcoa's economic moat is best characterized as Narrow. While the company benefits from certain advantages, such as its integrated operations and scale, these are not sufficient to create a wide and sustainable competitive advantage. The primary source of Alcoa's moat is its cost advantages in bauxite mining and alumina refining. Owning and operating its own bauxite mines allows Alcoa to control its raw material costs, which is a significant advantage in the aluminum production process. Additionally, its large-scale alumina refineries benefit from economies of scale, further reducing its production costs.
However, these cost advantages are not insurmountable. Other aluminum producers also have access to bauxite resources and can achieve economies of scale through their own operations. Furthermore, the aluminum industry is highly competitive, with numerous players vying for market share. This intense competition limits Alcoa's ability to raise prices and maintain high profit margins. The cyclical nature of the industry also erodes Alcoa's moat during periods of low demand and oversupply.
Alcoa's intangible assets, such as its brand reputation and technological expertise, contribute modestly to its moat. The company has a long history of innovation in aluminum production and has developed a reputation for quality and reliability. However, these intangible assets are not unique to Alcoa and can be replicated by its competitors. The company's switching costs are also relatively low, as customers can easily switch to alternative aluminum suppliers if they offer better prices or terms.
Efficient scale is not a significant source of Alcoa's moat. While the aluminum industry requires substantial capital investment, there are numerous producers operating at scale, both globally and regionally. This limits Alcoa's ability to dominate the market and earn outsized profits. The company's network effects are also minimal, as the value of its products does not increase as more customers use them.
In summary, Alcoa possesses a narrow economic moat based primarily on its cost advantages in bauxite mining and alumina refining. However, this moat is vulnerable to competition, cyclicality, and technological disruption. The company's ability to maintain and strengthen its moat will depend on its continued focus on cost optimization, innovation, and customer service.
Financial Health & Profitability
Alcoa's financial health presents a mixed picture. While the company has demonstrated periods of strong profitability, its financial performance has been volatile, reflecting the cyclical nature of the aluminum industry. The company's revenue for FY2025 was $12.83 billion, with a net income of $1.12 billion, translating to an EPS of $4.37. This represents a significant improvement compared to FY2024, when the company reported a net income of only $24 million and an EPS of $0.26. However, FY2023 saw a net loss of $773 million, highlighting the inherent volatility in Alcoa's earnings.
The company's gross margin of 10.0% is significantly lower than the sector average of 30.2%, indicating that Alcoa's cost structure is less efficient than its peers. However, its operating margin of 9.3% and net margin of 8.0% are higher than the sector averages of 6.0% and 3.0%, respectively, suggesting that Alcoa is more effective at managing its operating expenses and generating profits from its revenue. The company's ROE of 16.6% is also significantly higher than the sector average of 2.7%, indicating that Alcoa is generating a higher return on equity than its peers.
Alcoa's balance sheet is relatively healthy, with a current ratio of 1.44, indicating that it has sufficient current assets to cover its current liabilities. The company's total cash of $1.49 billion provides a buffer against unexpected expenses and allows it to invest in growth opportunities. However, its total debt of $2.44 billion represents a significant financial obligation, and its debt-to-equity ratio of 40.00 is in line with the sector average.
A concerning aspect of Alcoa's financial health is its negative free cash flow of -$777.69 million. This indicates that the company is not generating enough cash from its operations to cover its capital expenditures and other cash outflows. This negative free cash flow could put pressure on Alcoa's balance sheet and limit its ability to invest in growth opportunities or return capital to shareholders. The quarterly financial history reveals inconsistent operating margins, ranging from -12.5% to 19.8%, further emphasizing the volatility in Alcoa's financial performance.
Overall, Alcoa's financial health is characterized by strong revenue growth and profitability in certain periods, but also by significant volatility and negative free cash flow. The company's ability to improve its cost structure, generate consistent free cash flow, and manage its debt will be critical for its long-term financial stability.
Valuation Assessment
Alcoa's valuation presents an interesting case, appearing relatively attractive compared to its sector based on certain metrics, but requiring deeper scrutiny due to its cyclicality and recent performance. The company's P/E ratio of 12.8x is significantly lower than the sector average of 26.1x, suggesting that the stock is undervalued relative to its earnings. Similarly, its EV/EBITDA ratio of 4.1x is lower than the sector average of 5.2x, further indicating a potential undervaluation. These metrics, at face value, might attract value investors seeking exposure to the materials sector.
However, relying solely on these multiples can be misleading, especially for companies in cyclical industries like aluminum. Alcoa's earnings have been highly volatile, as evidenced by the significant swings in net income over the past few years. A high P/E ratio during periods of low earnings can make the stock appear expensive, while a low P/E ratio during periods of high earnings can make it appear cheap. Therefore, it is crucial to consider Alcoa's historical earnings and future growth prospects when assessing its valuation.
The negative free cash flow of -$777.69 million is a significant concern. A company that is not generating positive free cash flow may struggle to fund its operations, invest in growth opportunities, or return capital to shareholders. This negative free cash flow could also put downward pressure on the stock price. Investors should carefully analyze the reasons for Alcoa's negative free cash flow and assess whether it is likely to improve in the future.
Considering Alcoa's historical performance, cyclicality, and negative free cash flow, the stock's valuation appears to be fair, but not necessarily a bargain. While the company's P/E and EV/EBITDA ratios are attractive compared to the sector, these metrics do not fully capture the risks and uncertainties associated with Alcoa's business. Investors should demand a higher margin of safety to compensate for the company's volatile earnings and negative free cash flow.
A discounted cash flow (DCF) analysis would provide a more comprehensive assessment of Alcoa's valuation. However, given the company's volatile earnings and negative free cash flow, it may be difficult to accurately forecast its future cash flows. Investors should also consider the potential impact of commodity price fluctuations, energy costs, and global economic conditions on Alcoa's future performance.
Risk & Uncertainty
Alcoa faces several specific risks that could negatively impact its business and financial performance. The most significant risk is its exposure to commodity price volatility. The prices of bauxite, alumina, and aluminum are subject to fluctuations based on supply and demand, global economic conditions, and geopolitical events. A decline in aluminum prices could significantly reduce Alcoa's revenue and profitability. The company attempts to mitigate this risk through hedging strategies and long-term contracts, but these measures may not fully protect it from price declines.
Another significant risk is Alcoa's exposure to energy costs. Aluminum smelting is an energy-intensive process, and fluctuations in energy prices can significantly impact Alcoa's production costs. The company attempts to mitigate this risk through long-term power purchase agreements and investments in renewable energy sources, but these measures may not fully protect it from energy price increases. Furthermore, regulatory changes related to climate change could increase Alcoa's energy costs and compliance expenses.
Alcoa also faces operational risks related to its mining and smelting operations. These operations are subject to disruptions due to equipment failures, natural disasters, and labor disputes. Any significant disruption to Alcoa's operations could reduce its production volume and increase its costs. The company attempts to mitigate these risks through preventative maintenance programs, insurance coverage, and contingency plans, but these measures may not fully protect it from operational disruptions.
Competition is another significant risk for Alcoa. The aluminum industry is highly competitive, with numerous players vying for market share. Alcoa competes with large multinational corporations, as well as smaller regional producers. Increased competition could put downward pressure on aluminum prices and reduce Alcoa's market share. The company attempts to differentiate itself through product quality, customer service, and technological innovation, but these measures may not fully protect it from competition.
Finally, Alcoa faces risks related to its debt levels. The company has a significant amount of debt outstanding, which could put pressure on its balance sheet and limit its ability to invest in growth opportunities. A downgrade in Alcoa's credit rating could increase its borrowing costs and further strain its financial resources. The company attempts to manage its debt levels through refinancing and debt reduction programs, but these measures may not fully mitigate the risks associated with its debt.
Bulls Say / Bears Say
The Bull Case
BULL VIEWAlcoa's low P/E and EV/EBITDA ratios compared to the sector suggest it's significantly undervalued, offering substantial upside potential as aluminum demand grows.
BULL VIEWThe company's vertical integration provides a competitive edge, allowing it to control costs and capture value across the entire aluminum supply chain, leading to higher profitability.
The Bear Case
BEAR VIEWAlcoa's negative free cash flow and volatile earnings history raise serious concerns about its financial stability and ability to sustain growth.
BEAR VIEWThe company's high beta of 1.7 indicates it's significantly more volatile than the market, making it a risky investment in an already cyclical industry.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score AA and 4,400+ other equities.
Alcoa Corp exhibits a 75% valuation premium relative to institutional benchmarks. This represents a potential valuation overextension based on current multiples.
Return on Assets
Efficiency of asset utilization
6.3%
Sector: 0.6%
Gross Margin
Pricing power and cost efficiency
10.0%
Sector: 29.8%
Operating Margin
Core business profitability
9.3%
Sector: 6.0%
Net Margin
Bottom-line profitability
8.0%
Sector: 3.0%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
