Alcoa Corporation AA depends heavily on its Alumina business for growth, but recent weakness in the segment could create short-term pressure. In the first quarter of 2026, AA’s alumina production declined 5% sequentially to 2.4 million metric tons due to seasonal maintenance at Australian refineries. The company’s third-party alumina shipments also decreased 31% on a sequential basis because of lower external alumina sales, seasonal weakness and shipment delays caused by the Middle East conflict and Cyclone Narelle.
The slowdown also affected profitability. The Alumina segment faced pressure from lower shipments, weaker pricing from bauxite agreements and higher costs. Looking ahead, the company expects second-quarter Alumina segment earnings to face around a $15 million headwind from weaker bauxite pricing and higher energy costs.
However, this weakness may only be temporary. Alcoa has maintained its full-year 2026 guidance and expects alumina production between 9.7 million and 9.9 million metric tons, with shipments in the range of 11.8-12.0 million metric tons. This indicates that the company expects operations to improve in the coming quarters.
In the long run, Alcoa’s strong asset base and efforts to improve operations are expected to support growth. While a softer Alumina segment may weigh on near-term results, it is unlikely to significantly limit the company’s long-term growth potential.
Snapshot of AA's Peers
Among its peers, Ryerson Holding Corporation’s RYZ first-quarter 2026 revenues increased more than 30% year over year, driven by higher volumes following the merger with Olympic Steel. Improved selling prices amid stronger metal prices and demand conditions are also aiding Ryerson. Ryerson's average selling prices rose across all product categories, led by aluminum plate, aluminum flat and aluminum long products.
Another peer, Constellium SE CSTM, is gaining from strength in the Packaging & Automotive Rolled Products segment. In the first quarter of 2026, revenues from Constellium’s segment increased 24% year over year, supported by higher metal prices. However, Constellium’s segment shipments decreased 3% year over year due to lower shipments of rolled packaging products.
AA’s Price Performance, Valuation and Estimates
Shares of Alcoa have gained 152.7% in the past year compared with the industry’s growth of 143.4%.
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From a valuation standpoint, AA is trading at a forward price-to-earnings ratio of 9.00X, below the industry’s average of 9.23X. Alcoa carries a Value Score of B.
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The Zacks Consensus Estimate for AA’s 2026 earnings has increased 35.2% over the past 60 days.
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The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).