Value
9.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.6 |
| P/S | 9.8 |
| EV/EBITDA | 9.5 |
| Fwd P/E | 9.6 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 7.7x
- ▸PEG: 0.07
- ▸Attractively valued
AA · Why this verdict
Why Alcoa (AA) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score6.5/10
ConfidenceMEDIUM
MacroRISK_OFF
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Alcoa is attractively valued at a forward P/E of 7.3x and a PEG of 0.07, leaving room for re-rating if earnings hold. Valuation breakdown | Forward P/E stays below ~10x while earnings estimates hold, and price moves toward the $47.50 analyst target. | →Stable |
| CounterA low multiple on a commodity producer often reflects peak-cycle earnings; if aluminum prices roll over, forward earnings collapse and the multiple is a value trap. | ||
Growth is strong at 24% YoY, with June 2026 quarter revenue of $3.97B versus $3.02B a year earlier. Growth breakdown | Quarterly revenue stays above $3.5B through the next 12 months with continued positive earnings growth. | →Stable |
| CounterGrowth is driven by commodity pricing rather than volume, and comparisons against a weak 2025 base flatter the year-over-year figures. | ||
The stock is in a confirmed downtrend: RSI of 21, below the 200-day average with a -1.5%/30d slope, and a 55% drawdown from its 52-week high. Momentum breakdown | Price must stabilize and reclaim the 200-day average before the setup improves; until then momentum remains a headwind. | ↑Improving |
| CounterCapitulation-level oversold readings often precede sharp reversals, and the 3.1 reward-to-risk ratio suggests selling is already priced in. | ||
Earnings delivery is inconsistent: 2 beats and 2 misses over the last four quarters, though the latest quarter beat by 20.19% and average surprise is +8.0%. Avg surprise pct | Beats outnumber misses over the next four quarters with average surprise staying positive. | ↓Deteriorating |
| CounterTwo misses in the last four quarters, including a -9.57% miss in April 2026, show estimates are hard to hit in a volatile commodity business. | ||
Balance-sheet and accounting quality is solid (Piotroski F-Score 8/9), but cash conversion is a concern at 60% FCF to net income. Quality breakdown | FCF/net income improves toward 80% as working capital and capex normalize. | →Stable |
| CounterWeak cash conversion means reported profits are not fully translating into cash, limiting dividend and debt-reduction capacity. | ||
Alcoa is attractively valued at a forward P/E of 7.3x and a PEG of 0.07, leaving room for re-rating if earnings hold.
→StableValuation breakdown
- Expectation
- Forward P/E stays below ~10x while earnings estimates hold, and price moves toward the $47.50 analyst target.
CounterA low multiple on a commodity producer often reflects peak-cycle earnings; if aluminum prices roll over, forward earnings collapse and the multiple is a value trap.
Growth is strong at 24% YoY, with June 2026 quarter revenue of $3.97B versus $3.02B a year earlier.
→StableGrowth breakdown
- Expectation
- Quarterly revenue stays above $3.5B through the next 12 months with continued positive earnings growth.
CounterGrowth is driven by commodity pricing rather than volume, and comparisons against a weak 2025 base flatter the year-over-year figures.
The stock is in a confirmed downtrend: RSI of 21, below the 200-day average with a -1.5%/30d slope, and a 55% drawdown from its 52-week high.
↑ImprovingMomentum breakdown
- Expectation
- Price must stabilize and reclaim the 200-day average before the setup improves; until then momentum remains a headwind.
CounterCapitulation-level oversold readings often precede sharp reversals, and the 3.1 reward-to-risk ratio suggests selling is already priced in.
Earnings delivery is inconsistent: 2 beats and 2 misses over the last four quarters, though the latest quarter beat by 20.19% and average surprise is +8.0%.
↓DeterioratingAvg surprise pct
- Expectation
- Beats outnumber misses over the next four quarters with average surprise staying positive.
CounterTwo misses in the last four quarters, including a -9.57% miss in April 2026, show estimates are hard to hit in a volatile commodity business.
Balance-sheet and accounting quality is solid (Piotroski F-Score 8/9), but cash conversion is a concern at 60% FCF to net income.
→StableQuality breakdown
- Expectation
- FCF/net income improves toward 80% as working capital and capex normalize.
CounterWeak cash conversion means reported profits are not fully translating into cash, limiting dividend and debt-reduction capacity.
Per-dimension breakdown
Quality
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.9 |
| ROA | 5.0 |
| Gross margin | 0.6 |
| Op margin | 6.5 |
| Net margin | 5.3 |
| Current ratio | 7.9 |
| FCF quality | 4.7 |
| Moat | 6.8 |
| Piotroski F | 8.9 |
- ▸Earnings quality warning: 60% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
9.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 8.4 |
| EPS growth | 10.0 |
- ▸Strong growth: 24% YoY
Momentum
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 7.9 |
| OBV | 10.0 |
| MA position | 1.0 |
| Volume | 4.5 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -2.3%/30d — confirmed downtrend
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.8 |
| Analyst rating | 7.2 |
| Price target | 9.0 |
- ▸Analyst upside: 36%
Insider
5.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.2 |
| notable moves | 5.0 |
- ▸Insider selling (low materiality) — $1,131,859 (0.011% of mkt cap)
Peer rank
3.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.5 |
| quality rank | 2.5 |
| growth rank | 2.5 |
Technical
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.3 |
| support resistance | 6.1 |
| 52w position | 0.0 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 8.2 |
| volatility | 3.0 |
| put call | 4.7 |
| implied vol | 4.6 |
| max pain risk | 7.0 |
| beta | 4.2 |
| debt equity | 7.5 |
| news risk | 5.5 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 6.5 |
| dividend safety | 8.5 |
| news activity | 6.0 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend aristocrat: 1.0% yield
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier -2 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=-2Passed (7)
- MOMENTUM:5.4>=4.5
- ASYMMETRY:2.4>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:84d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (3)
- MOMENTUM:5.4<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:momentum=5.4>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
2.39
Upside
+18.1%
Downside
7.6%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeSector Rotation — Basic Materials sector out of favor, value=9.3
SuitabilitySpeculative — Drawdown -52% (>40% off 52w high)
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.4>=4.5. Top dim: Value at 9.3; weakest: Peer rank at 3.1. No conviction either direction.
The strongest dimensions are Value at 9.3, Growth at 9.2, and Sentiment at 6.6; the weakest are Peer rank at 3.1, Technical at 4.1, and Insider at 5.4. The V9 engine cleared all gates with 3 warnings, producing an asymmetric reward-to-risk of 2.39 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deep Valuation Discount
Trip ifForward P/E rises above 12x from the current 7.3x, as earnings estimates are cut at an unchanged price.
- P2Strong Revenue Earnings Growth
Trip ifQuarterly revenue falls below $3.0B from $3.97B in the June 2026 quarter.
- P3Confirmed Downtrend Pressure
Trip ifRSI rises above 50 and price recovers more than 20% above the current $37.91, disproving the downtrend.
- P4Mixed Earnings Track Record
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P5Earnings Quality Cash Conversion
Trip ifFCF to net income falls below 40% from the current 60%.