Alcoa Earnings Preview

Dow component Alcoa (NYSE: AA), the largest U.S. aluminum maker, reports fourth-quarter results after the bell today. Analysts expect a profit of of 1 cent per share on revenue of $5.78 billion. That's down significantly from a forecast issued at the end of September of of 28 cents per share on revenue of $6.3 billion. In the fourth quarter of 2010, Alcoa earned $258 million, or 24 cents a share, on revenue of $5.65 billion.

Slowing economies across the world have crimped aluminum demand and Alcoa said last week it would pare smelting capacity by 12%, resulting in a knock of 15-16 cents per share on its fourth-quarter results.

Aluminum prices have been plunging, but Alcoa and its rivals still face rising materials costs, which eat away at their profits. The Pennsylvania-based company depends on the U.S. and Europe for the bulk of its revenue.

Among the smelters seeing a reduction in activity by Alcoa are one in Italy and two in Spain. Shares of Alcoa have tumbled almost 44% in the past year, but some analysts are betting on a rebound in aluminum prices this year. The stock currently trades around $9.30, but the average analyst price target is over $12.

Alcoa is almost 29% below its 200-day moving average and more than 49% below its 52-week high. The stock is the second-lowest priced in the Dow, a price-weighted index, behind only Bank of America (NYSE: BAC).