Alcoa stock gained 2.5% in premarket trading after the company reported strong fourth-quarter results.
There is plenty to like from the report: Results look solid and financial guidance for the first quarter of 2022 is strong.
Alcoa reported $896 million in Ebitda—short for earnings before interest, taxes, depreciation, and amortization—right in line with Wall Street estimates. It posted adjusted earnings of $2.50 a share from $3.3 billion in sales; Wall Street was looking for $1.93 in per-share earnings from $3.3 billion in sales.
The fourth-quarter 2021 results are a sharp improvement from a year ago, when Alcoa earned $361 million in Ebitda and 26 cents a share from $2.4 billion in sales.
Commodity aluminum prices are up roughly 50% over the past year. That’s a powerful tailwind for Alcoa results. Higher aluminum prices are also a powerful tailwind for the stock. Alcoa shares have gained about 160% over the past 12 months.
Management appeared pleased with the fourth-quarter and full-year performance. “We had a transformative year in 2021; we posted our highest ever annual net income, returned cash to our stockholders and significantly reduced our debt and pension obligations,” said CEO Roy Harvey in the company’s news release.
Alcoa paid back about $1.3 billion in bonds during 2021, added $500 million to the company’s U.S. pension plans, and spent $150 million buying back stock.
Looking ahead, Alcoa expects first-quarter results to come close to the fourth-quarter figures. That’s better than analysts are projecting. Wall Street currently expects $870 million in Ebitda and $1.63 in per-share earnings from $3.2 billion in sales for the first quarter.
For all of 2022, analysts project $3.2 billion in Ebitda and $6.52 in per-share earnings from $13.1 billion in sales. Of course, commodity prices will have a lot to say about exactly how Alcoa’s year turns out.