AA gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 156 industry peers in the Metals & Mining industry. AA has a medium profitability rating, but doesn't score so well on its financial health evaluation. AA is valued quite cheap, but it does not seem to be growing.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year AA was profitable.
In the past year AA had a positive cash flow from operations.
In multiple years AA reported negative net income over the last 5 years.
Each year in the past 5 years AA had a positive operating cash flow.

1.2 Ratios

AA has a Return On Assets of 7.22%. This is in the better half of the industry: AA outperforms 79.87% of its industry peers.
AA has a Return On Equity of 19.08%. This is amongst the best in the industry. AA outperforms 92.21% of its industry peers.
AA's Return On Invested Capital of 7.91% is fine compared to the rest of the industry. AA outperforms 70.13% of its industry peers.

		Industry Rank	Sector Rank
ROA	7.22%
ROE	19.08%
ROIC	7.91%

ROA(3y)1.01%

ROA(5y)1.01%

ROE(3y)1.64%

ROE(5y)2.34%

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

AA has a better Profit Margin (9.12%) than 75.32% of its industry peers.
Looking at the Operating Margin, with a value of 9.71%, AA is in the better half of the industry, outperforming 64.94% of the companies in the same industry.
In the last couple of years the Operating Margin of AA has grown nicely.
AA has a Gross Margin (17.08%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of AA has grown nicely.

		Industry Rank	Sector Rank
OM	9.71%
PM (TTM)	9.12%
GM	17.08%

OM growth 3Y-4.45%

OM growth 5Y15.91%

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y-1.69%

GM growth 5Y3.79%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so AA is destroying value.
AA has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, AA has more shares outstanding
The debt/assets ratio for AA has been reduced compared to a year ago.

2.2 Solvency

An Altman-Z score of 2.08 indicates that AA is not a great score, but indicates only limited risk for bankruptcy at the moment.
AA's Altman-Z score of 2.08 is on the low side compared to the rest of the industry. AA is outperformed by 72.08% of its industry peers.
The Debt to FCF ratio of AA is 4.30, which is a neutral value as it means it would take AA, 4.30 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 4.30, AA is in the better half of the industry, outperforming 72.08% of the companies in the same industry.
AA has a Debt/Equity ratio of 0.40. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.40, AA is doing worse than 68.18% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.4
Debt/FCF	4.3
Altman-Z	2.08

ROIC/WACC0.76

WACC10.38%

2.3 Liquidity

AA has a Current Ratio of 1.45. This is a normal value and indicates that AA is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.45, AA is doing worse than 72.73% of the companies in the same industry.
A Quick Ratio of 0.87 indicates that AA may have some problems paying its short term obligations.
With a Quick ratio value of 0.87, AA is not doing good in the industry: 75.32% of the companies in the same industry are doing better.

		Industry Rank	Sector Rank
Current Ratio	1.45
Quick Ratio	0.87

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

AA shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 293.75%, which is quite impressive.
Measured over the past years, AA shows a decrease in Earnings Per Share. The EPS has been decreasing by -7.00% on average per year.
AA shows a small growth in Revenue. In the last year, the Revenue has grown by 7.87%.
The Revenue has been growing slightly by 6.68% on average over the past years.

EPS 1Y (TTM)293.75%

EPS 3Y-7%

EPS 5YN/A

EPS Q2Q%21.15%

Revenue 1Y (TTM)7.87%

Revenue growth 3Y1.01%

Revenue growth 5Y6.68%

Sales Q2Q%-1.06%

3.2 Future

AA is expected to show a decrease in Earnings Per Share. In the coming years, the EPS will decrease by -8.37% yearly.
AA is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -1.16% yearly.

EPS Next Y16.25%

EPS Next 2Y18.3%

EPS Next 3Y-6.34%

EPS Next 5Y-8.37%

Revenue Next Year7.64%

Revenue Next 2Y4.29%

Revenue Next 3Y3.32%

Revenue Next 5Y-1.16%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 15.03 indicates a correct valuation of AA.
Compared to the rest of the industry, the Price/Earnings ratio of AA indicates a rather cheap valuation: AA is cheaper than 94.16% of the companies listed in the same industry.
AA's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.30.
AA is valuated correctly with a Price/Forward Earnings ratio of 12.93.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AA indicates a somewhat cheap valuation: AA is cheaper than 75.97% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.57, AA is valued a bit cheaper.

		Industry Rank	Sector Rank
PE	15.03
Fwd PE	12.93

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, AA is valued cheaply inside the industry as 88.96% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of AA indicates a rather cheap valuation: AA is cheaper than 87.01% of the companies listed in the same industry.

		Industry Rank	Sector Rank
P/FCF	25.95
EV/EBITDA	8.85

4.3 Compensation for Growth

AA's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of AA may justify a higher PE ratio.
A cheap valuation may be justified as AA's earnings are expected to decrease with -6.34% in the coming years.

PEG (NY)0.93

PEG (5Y)N/A

EPS Next 2Y18.3%

EPS Next 3Y-6.34%

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5. Dividend

5.1 Amount

AA has a yearly dividend return of 0.66%, which is pretty low.
AA's Dividend Yield is a higher than the industry average which is at 1.01.
Compared to an average S&P500 Dividend Yield of 1.83, AA's dividend is way lower than the S&P500 average.

		Industry Rank	Sector Rank
Dividend Yield	0.66%

5.2 History

AA has been paying a dividend for at least 10 years, so it has a reliable track record.
AA has not decreased its dividend in the last 3 years.

Dividend Growth(5Y)N/A

Div Incr Years0

Div Non Decr Years3

5.3 Sustainability

8.97% of the earnings are spent on dividend by AA. This is a low number and sustainable payout ratio.

DP8.97%

EPS Next 2Y18.3%

EPS Next 3Y-6.34%

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ALCOA CORP / AA FAQ

Can you provide the ChartMill fundamental rating for ALCOA CORP?

ChartMill assigns a fundamental rating of 5 / 10 to AA.

What is the valuation status of ALCOA CORP (AA) stock?

ChartMill assigns a valuation rating of 7 / 10 to ALCOA CORP (AA). This can be considered as Undervalued.

Can you provide the profitability details for ALCOA CORP?

ALCOA CORP (AA) has a profitability rating of 6 / 10.

Can you provide the financial health for AA stock?

The financial health rating of ALCOA CORP (AA) is 3 / 10.

Can you provide the dividend sustainability for AA stock?

The dividend rating of ALCOA CORP (AA) is 4 / 10 and the dividend payout ratio is 8.97%.