On Monday market pros parsed through results from Alcoa attempting to get a handle on their earnings release.
”It’s a buffet,” says Fast trader Brian Kelly. “They had good revenues but they only met expectations and lowered forecasts because of raw material costs.”
By the numbers, net earnings were $322 million, or 28 cents per share, compared with $136 million, or 13 cents per share in the same quarter of 2010, Income from continuing operations, excluding one-time items, was 32 cents a share.
Also, the company said demand for aluminum remained strong.
However, in a sign of pressure on profit margins, income from continuing operations before taxes was 7.9% of sales in the latest quarter, down from 8.4% in the first quarter.
But dig down into the results, and trader Brian Kelly thinks you'll find a few important nuggets about the global recovery - and they're bullish.
“Results show airline demand being good,” he says, “ as well as car demand and demand for truck bodies – that says the global recovery is still on track.”
Although he thinks Aloca is fairly valued, if you’re looking for a trade Guy Adami suggests playing the strong airline demand with a long position in Boeing . “Around $71 I’d look at this stock ahead of their earnings.”
Trader Karen Finerman isn’t so sure that investors should extrapolate too much from Alcoa results. If you’re looking for a bellwether, she says wait for JPMorgan, they’ll speak volumes about the banking sector.
