Aluminum producer Alcoa reported that third-quarter profit rose 3%, boosted by a gain on the sale of its stake in Chinese aluminum company that offset weaker aluminum prices and restructuring costs.
The company also said it was increasing its share buyback program -- from 10% to 25% of outstanding shares, or approximately 217 million shares. At the current share price that is worth more than $6.7 billion.
Bruce Zaro, Chief Technical Advisor at Delta Global Advisors called the share repurchase "somewhat surprising in view of high material pricing and just meeting the (target).
"The good news is that the cash flow has been so strong that they are able to do this."
In its earnings release, Alcoa said net income was $555 million, or 63 cents per share, compared with $537 million, or 61 cents per share, in the year-ago period.
Earnings from continuing operations were 64 cents per share, up 2 cents from a year earlier but a penny short of the 65 cents analysts had expected, according to Thomson Financial.
Revenue fell to $7.4 billion from $7.6 billion.
Alcoa's share price also has dropped off a 52-week high of $48.77 in July and Tuesday closed at $39.72.
Last week, Alcoa said it is close to selling both its packaging and consumer business and its automotive castings business. It also plans to restructure its electrical and electronic solutions business in the Americas and Europe.
In September, the company sold its stake in Aluminum Corp of China (Chalco) for about $2 billion, a $1.8 billion gain on an investment. Alcoa bought the stake six years ago as a financial investment and said its role as an investor was no longer needed by the now-established Chinese company.