Why Alcoa Stock Popped on Friday

Alcoa (AA) stock experienced a significant increase on Friday following the company's strong performance in Q3 earnings. Analysts had projected a $1.54 per share profit, but Alcoa actually delivered $1.82 per share, surpassing expectations. While sales fell slightly short, coming in at $3.7 billion compared to the $3.8 billion estimate, the company's sales grew by an impressive 23.7%.

The most remarkable aspect was the turnaround in earnings, which shifted from negative to positive on an adjusted basis and more than doubled to $1.81 per share under generally accepted accounting principles (GAAP) calculations. This marked a significant improvement from the previous quarter's losses. Moreover, Alcoa generated $472 million in free cash flow, effectively covering 97.7% of the reported net income with actual cash profit.

The company's profit margins expanded from 7.7% to 13%, showcasing improved efficiency. CEO William F. Oplinger highlighted that Alcoa's production levels increased due to enhanced refinery performance and the contributions of recent acquisitions. Management reaffirmed its target for the year, aiming to ship between 2.6 and 2.8 million metric tons of aluminum and 11.5 and 11.6 million metric tons of alumina.

While input costs may pose challenges, analysts still anticipate Alcoa to conclude 2026 with $6.81 per share in profit, valuing the stock at a reasonable 6.3x current-year earnings.