AA Stock Risk & Deep Value Analysis
Alcoa Corp
Basic Materials • Aluminum
DVR Score
out of 10
What You Need to Know About AA Stock
We analyzed Alcoa Corp using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran AA through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Moderate-High. Here's what we found.
AA Risk Analysis & Red Flags
What Could Go Wrong
The primary risk is a significant and sustained downturn in global aluminum prices, which would severely impact Alcoa's revenue and profitability, eroding the current positive outlook and potentially leading to a sharp decline in stock value.
Risk Matrix
Overall
Moderate-High
Financial
Medium
Market
High
Competitive
Medium
Execution
Medium
Regulatory
Medium
Red Flags
- ⚠
Inherent cyclicality and volatility of commodity prices tied to global industrial demand.
- ⚠
Exposure to tariff risks on Canadian production and alumina price pressures.
- ⚠
Business model largely relies on incremental global industrial demand, not disruptive market creation.
Upcoming Risk Events
- 📅
Global economic slowdown impacting industrial demand for aluminum
- 📅
Significant downturn in aluminum commodity prices
- 📅
Increased tariff risks or trade disputes impacting global aluminum flows
When to Reconsider
- 🚪
Exit if global aluminum spot prices show sustained decline below cost of production for Alcoa.
- 🚪
Sell if the company reports negative free cash flow for two consecutive quarters.
- 🚪
Exit if gross margins fall below 10% for two consecutive quarters, signaling significant pricing pressure.
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What Does Alcoa Corp (AA) Do?
Market Cap
$18.93B
Sector
Basic Materials
Industry
Aluminum
Employees
13,900
Alcoa Corporation, together with its subsidiaries, engages in the bauxite mining, alumina refining, aluminum production, and energy generation business in Australia, Brazil, Canada, Iceland, Norway, Spain, the United States, and internationally. The company operates through two segments, Alumina and Aluminum. It operates bauxite and other aluminous ores mining; and processes bauxite into alumina for sale to aluminum smelter customers and customers who process it into industrial chemical products through supply contracts to third parties, as well as aluminum smelting and casting businesses. The company offers primary aluminum in the form of alloy ingot or value-add ingot to customers that produce products for transportation, building and construction, packaging, wire, other industrial markets, and traders. In addition, it provides energy that generates and sells electricity in the wholesale market to traders, large industrial consumers, distribution companies, and other generation companies. The company was formerly known as Alcoa Upstream Corporation and changed its name to Alcoa Corporation in October 2016. The company was founded in 1886 and is headquartered in Pittsburgh, Pennsylvania.
Visit Alcoa Corp WebsiteInvestment Thesis
Alcoa is a cyclically undervalued, well-managed global aluminum producer benefiting from a strengthening commodity cycle and increasing demand from sectors like AI/data centers and clean energy. Its focus on cost optimization and the long-term potential of sustainable production via ELYSIS offer incremental upside, positioning it for potential above-average returns within the materials sector, though not for 10x growth within 3-5 years due to its commodity nature.
Is AA Stock Undervalued?
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AA Price Targets & Strategy
12-Month Target
$83.33
Bull Case
$105.00
Bear Case
$40.00
Valuation Basis
Based on 13x forward P/E applied to Morgan Stanley's estimated FY2026 EPS of $6.41.
Entry Strategy
Consider dollar-cost averaging in the current price range ($70-$75) or on dips towards $65, watching for stability in aluminum prices.
Exit Strategy
Take 50% profit at $85, 100% at $100. Stop-loss at $60 (a level of recent support).
Portfolio Allocation
2-4% for moderate risk tolerance, acknowledging cyclicality.
Price Targets & Strategy
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Is AA Financially Healthy?
Valuation
P/E Ratio
16.37
Forward P/E
12.09
EV/EBITDA
6.15
PEG Ratio
0.73
Price/Book
2.87
Price/Sales
1.33
Profitability
Gross Margin
16.94%
Operating Margin
1.29%
Net Margin
9.02%
Return on Equity
18.96%
Revenue Growth
7.87%
EPS
$4.43
Balance Sheet
Current Ratio
1.44
Quick Ratio
0.77
Debt/Equity
0.40
Total Debt
$2.76B
Cash & Equivalents
$1.60B
Cash Flow
Operating Cash Flow
$1.12B
Free Cash Flow
$1.60B
EBITDA
$1.92B
Other
Beta (Volatility)
1.71
Dividend Yield
0.55%
Does AA Have a Competitive Moat?
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🛡️ Narrow
Moat Trend
Stable
Moat Sources
3 Identified
Alcoa's moat is durable due to the high capital intensity and global scale required for bauxite mining, alumina refining, and aluminum smelting. Its operational efficiencies and the long-term potential of ELYSIS for greener production provide a degree of protection against competitors.
Moat Erosion Risks
- •Global oversupply of aluminum, eroding pricing power.
- •Technological advancements by competitors in cost-effective production.
- •Shifts in global energy prices impacting production costs.
AA Competitive Moat Analysis
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AA Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral (No specific data provided in research)
Institutional Sentiment
Positive (Morgan Stanley raised 2026 aluminum segment pricing 13%, EBITDA 41%, EPS 52%).
Insider Activity (Form 4)
No Form 4 filings reported in available data within the last 90 days.
Options Flow
Normal options activity (No specific unusual options activity reported in research).
Earnings Intelligence
Next Earnings
2026-04-16
Surprise Probability
Medium
Historical Earnings Pattern
No specific historical earnings reaction patterns provided in research context.
Key Metrics to Watch
Competitive Position
Top Competitor
Rio Tinto (RIO)
Market Share Trend
Stable
Valuation vs Peers
Trading at a discount to sector median on P/E (8.3x vs 9.8x), P/B (1.3x vs 1.7x), and P/S (0.6x vs 1.9x).
Competitive Advantages
- •Integrated value chain from bauxite to aluminum production
- •Cost-efficient operations in key regions
- •Early mover advantage in sustainable aluminum production (ELYSIS technology)
Market Intelligence
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What Could Drive AA Stock Higher?
Near-Term (0-6 months)
- •Q1 2026 Earnings report on April 16, 2026 (post-market)
- •Redemption of $219M 6.125% notes on May 15, 2026
Medium-Term (6-18 months)
- •Sustained strong aluminum demand driven by AI/data center infrastructure and renewable energy sectors
- •Further progress and adoption of ELYSIS sustainable aluminum technology
Long-Term (18+ months)
- •Widespread industrial adoption of low-carbon aluminum solutions (e.g., ELYSIS) becoming a significant competitive differentiator
- •Global economic growth driving sustained demand for industrial commodities
Catalysts & Growth Drivers
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What's the Bull Case for AA?
- ✓
Sustained increase in global aluminum demand and spot prices.
- ✓
Positive updates on ELYSIS technology commercialization and adoption.
- ✓
Continued debt reduction and strong free cash flow generation.
Bull Case Analysis
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Competing with AA
See how Alcoa Corp compares to related companies
| Company | Market Cap | DVR Score | P/E | Revenue | Profit Margin | Rev Growth | |
|---|---|---|---|---|---|---|---|
Alcoa Corp AA | $18.9B | 2.8 | 16.4 | $12.8B | 9.0% | 7.9% | |
Air Products and Chemicals Inc APD | $65.8B | 1.2 | -197.5 | $12.0B | -2.7% | 1.4% | Compare → |
Freeport-McMoRan Inc FCX | $88.0B | 0.9 | 39.9 | $26.4B | 7.8% | -28.0% | Compare → |
Newmont Corporation NEM | $130.0B | 1.0 | 17.4 | $22.7B | 31.7% | 21.0% | Compare → |
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How Alcoa Corp Makes Money
Alcoa Corporation is a global leader in the production of bauxite, alumina, and aluminum products. The company extracts bauxite ore, refines it into alumina, and then smelts the alumina into primary aluminum metal. These materials are essential for various industries, including aerospace, automotive, construction, and packaging. Alcoa generates revenue by selling these commodity products to customers worldwide.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Alcoa Corp (AA)?
As of April 15, 2026, Alcoa Corp has a DVR Score of 2.8 out of 10, placing it in the "Risk Trap" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Alcoa Corp?
Alcoa Corp's market capitalization is approximately $18.9B. The company operates in the Basic Materials sector within the Aluminum industry.
What ticker symbol does Alcoa Corp use?
AA is the ticker symbol for Alcoa Corp. The company trades on the NYQ.
What is the risk level for AA stock?
Our analysis rates Alcoa Corp's overall risk as Moderate-High. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of AA?
Alcoa Corp currently has a price-to-earnings (P/E) ratio of 16.4. This is in line with broader market averages.
Does Alcoa Corp pay a dividend?
Yes, Alcoa Corp pays a dividend with a current yield of approximately 0.55%.
Is Alcoa Corp's revenue growing?
Alcoa Corp has reported revenue growth of 7.9%. The company is growing at a moderate pace.
Is AA stock profitable?
Alcoa Corp has a profit margin of 9.0%. The company is profitable but margins are modest.
How often is the AA DVR analysis updated?
Our AI-powered analysis of Alcoa Corp is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on April 15, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for AA (Alcoa Corp) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.