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A Lot Is Riding On Alcoa's Earnings Call, Bloomberg Says

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A Lot Is Riding On Alcoa's Earnings Call, Bloomberg Says

Alcoa Inc (NYSE: AA)'s quarterly earnings report marks the unofficial start to earnings season. This time around there is a lot riding on its earnings report, at least according to Bloomberg.

Alcoa will report its final earnings report on Tuesday before the 128-year-old company splits into two businesses. As of next month, Alcoa Corp. will consist of the metal processing business and the second unit called Arconic Inc. will consist of the value-added parts operations.

Related Link: New Details On Alcoa's Plans To Split Into 2 Companies

Bloomberg stated that Alcoa's CEO Klaus Kleinfeld has "one more chance" to convince investors the company has done the right thing in splitting the company at a time when the aerospace industry is showing signs of slowing down.

Over the past two years, the Russell 3000 Diversified Manufacturing Operations Index gained 26 percent but the Bloomberg World Mining Index fell 22 percent. Alcoa's losses were steeper at 34 percent over the same time period, and its Tuesday's earnings report will break down how each of the segments performed.

"For the most part, investors understand this is a valuable asset," Anthony Young, an analyst at Macquarie Group, told Bloomberg. At the same time, "we're in the midst of a down cycle," in aerospace and "to match that supply with the demand is difficult."

Bloomberg noted that the average of six analyst estimates it compiled is calling for Alcoa's net income to rise by six cents from a year ago to 33 cents in the third quarter.

"If Alcoa delivers an in-line third-quarter downstream performance, it would have to deliver a very strong fourth quarter to meet 2016 guidance, which seems unlikely based on recent customer commentary," Bloomberg quoted analysts at Morgan Stanley as saying in a research report last week.

At last check, Alcoa was up 1.13 percent at $31.72.

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