How Will Alcoa Stock React To Its Upcoming Earnings?
Alcoa (NYSE:AA) is set to report its first quarter earnings on Wednesday, April 16, 2025. Revenues are likely to grow by about 22%, per consensus estimates, to about $3.6 billion, while earnings are likely to come in at about $1.20 per share. Growth is expected to be driven by higher alumina shipments, though price realizations would be lower. Robust demand for alumina is being driven by growth in sectors such as electric vehicles and renewable energy, which has supported increased shipments.
The company has $6.1 Bil in current market capitalization. Revenue over the last twelve months was $12 Bil, and it was operationally profitable with $828 Mil in operating profits and net income of $60 Mil. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
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Alcoa’s Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post-earnings returns:
- There are 20 earnings data points recorded over the last five years, with 6 positive and 14 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 30% of the time.
- However, this percentage decreases to 25% if we consider data for the last 3 years instead of 5.
- Median of the 6 positive returns = 3.1%, and median of the 14 negative returns = -4.3%
Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
AA observed 1D, 5D, and 21D returns post earnings
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
AA Correlation Between 1D, 5D and 21D Historical Returns
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