AA in the Spotlight: Strong Cash Flow & Downside Outlook

Here’s the breakdown of the month forecast for AA ($19.51 to $45.44 overall range). The table shows projected price bands, potential ROI against the current price, and the resulting model signal per period.

Over the forecast horizon (2025-07 to 2026-07), AA’s price is projected by the model to fluctuate between approximately $19.51 and $45.44.

The projected price range remains relatively consistent (from $30.68 – $30.68 to $19.51 – $38.96), implying stable forecast uncertainty.

AA demonstrates, with its Trailing P/E at 18.14x and Forward P/E at 9.44x, suggests an attractive valuation opportunity. This suggests potential earnings growth expectations Meanwhile, its Price/Sales ratio of 0.61x and Price/Book of 1.27x show that the company trades at multiples that warrant attention. These metrics provide insight into market positioning.

From an enterprise value perspective, The enterprise value to revenue ratio of 0.71x indicates reasonable revenue-based valuation, and its the EV/EBITDA multiple of 4.01x suggests reasonable earnings-based valuation. These valuation metrics provide a comprehensive view of the company’s current market positioning.

Although the market considers Alcoa Corporation to be a key player in the Aluminum industry with a 7.80 B market cap, its enterprise value is much higher at 8.94 B, with 1.14B of that value added by debt. Investors are confident about Alcoa Corporation’s future earnings, but keep in mind the risk of that large amount of debt.

The valuation ratios tell an interesting story: at 0.71x revenue and 4.01x EBITDA, Alcoa Corporation appears attractively valued compared to many peers. This reflects the company’s strong market position and brand assets. But it also means the stock may have little room for error. The upcoming 2025-07-16 earnings report will be crucial in showing whether Alcoa Corporation’s businesses can grow into this valuation, while the 2025-05-20 ex-dividend date serves as a reminder that Alcoa Corporation still rewards shareholders even as it invests for growth. Essentially, you’re paying for quality – but quality doesn’t come cheap.

An analysis of the key metrics in AA’s margin performance shows the company has solid control over its costs and prices. The company is successful in controlling its production costs, as shown by the gross margin of 20.70%, and it also profits well from its core operations, reflected in the 4.64% operating margin. A 17.79% EBITDA margin indicates AA is capable of generating strong cash flow from its operations before accounting for financing and tax strategies. All things considered, AA can hold onto around $7.860 in net profit for every $1 of its revenue over the last twelve months. While the business’s revenue is increasing at an aggressive rate (3.90%), investors should monitor if this pace can be sustained without eroding profit margins.

AA’s 2.27 B in EBITDA and 2.64 B in gross profit indicate its raw earning power, while the 990.00 M in net income reveals how effectively it converts that power into bottom-line results. The company appears to be balancing its pursuit of growth with the need to maintain profitability. Despite healthy gross margins, there is a significant difference between the company’s gross and net margins (20.70% vs. 7.86%). This is likely due to high operating expenses, interest costs, or taxes, which are key areas for investors to watch. In the future, maintaining steady or improving margins will be critical. AA needs to defend its pricing power and control operating costs, as this will help sustain profitability, especially if revenue growth moderates.

This section summarizes the collective view of professional analysts covering AA. The consensus recommendation is ‘Buy’. 11 analyst(s) contributed to this consensus view. The mean price target is $33.55, with individual targets ranging from $27.00 – $42.00. The average target ($33.55) suggests roughly 8.8% potential upside compared to the current price ($30.84). This provides a gauge of Wall Street sentiment regarding the stock’s potential.

AA’s financial health appears robust, showcasing several key strengths. The ROE and ROA of 17.15% and 7.06%, respectively, reflect a highly efficient use of capital, often seen in fast-growing firms. The 0.43x Debt/Equity ratio (with 2.66 B in debt and 1.51 B in cash) points to the fact that AA has taken on a manageable debt load to fuel its operations and growth. Even with its debt, the company’s ability to bring in 1.12 B in operating cash flow (TTM) proves that its core business can steadily produce cash, which is a significant strength.

The Current Ratio of 1.65x and Quick Ratio of 0.83x show a solid liquidity position, able to cover its short-term liabilities. Furthermore, AA’s 782.00 M in levered free cash flow suggests it can still generate significant cash for shareholders even after meeting its financial obligations. For investors, this financial profile suggests a resilient and well-managed company. The low debt and strong liquidity provide a solid safety net and the flexibility to invest in growth, weather economic downturns, or increase returns to shareholders.

In the recent trading period from July 11, 2025 to July 25, 2025, AA’s stock price achieved a total return of -0.80%. The price fluctuated between a high of $32.33 and a low of $28.12. Average daily trading volume was approximately 6,876,940 shares.

There is currently 15 M worth of short interest in AA, and the short ratio (or days to cover) is 2.4x. This means that at the stock’s recent average trading volume, it would take around 2 days for all short positions to be covered. This low level suggests that short sellers do not currently have significant control over the stock’s price, and the risk of a prolonged ‘short squeeze’ is relatively low.

With 6.30% of the public float sold short, a moderate percentage of the stock is being shorted, showing some bearish sentiment but not an extreme level. This level has increased recently from 14 M, suggesting a shift in bearish sentiment. With notable short interest, investors should be aware of potential volatility spikes, which could be triggered by news events that force short sellers to cover their positions.

When looking at the price range over the past year, the stock has seen a high of $47.77 and a low of $21.53. This wide gap tells us the stock has been through significant fluctuations, likely influenced by market sentiment or company-specific news. Currently, the 50-day moving average stands at $29.59, which is slightly below the 200-day moving average of $30.68. This setup may signal a short-term pullback or consolidation phase, especially for technical traders tracking momentum and trend direction.

The stock carries a beta of 2.25x, which means it tends to move more sharply than the broader market—about 125% more volatile. Combined with a high 30-day annualized volatility of 43.3%, it’s clear this stock sees frequent price swings. For investors, this means potential for gains, but also higher downside risk. These indicators matter when deciding position sizing or entry timing, especially if you’re managing a portfolio that balances stability with growth exposure.

Potential investors in AA should be aware of several risk factors. The following list highlights key considerations based on data and market dynamics, but may not include all possible risks.