Alcoa kicked off earnings season after the bell this afternoon and as usual, the company delivered subpar results. Estimates were for the company to make 48 cents per share. However, Alcoa could only manage 44 cents per share blaming higher energy costs and the weak dollar of all things for the shortfall. I have followed Alcoa for quite some time and I continue to be amazed that the company never meets expectations. The CEO had some nice things to say about their outlook going forward, but as always you have to wonder if Alcoa will be able to deliver.
In other news today, Arch Coal (ACI), which was one of the companies in the coal sector that I considered recommending before settling on JOYG and BUCY, said their earnings for 2008 would be between $2 and $2.50 per share. The consensus estimate before the announcement was $2.42. This disappointed the market and caused a broad selloff in the commodities sector. If you read some of the comments I made in response to Michael's comments on the JOYG/BUCY recommendation you will see that I felt these two companies were safer picks because there were so many other factors that came into play with the coal mining companies. I suspect that ACI hedged a bit too much of their 2008 output before coal prices started to rise during the Winter months and was not able to take full advantage. Even though ACI forecasted earnings that may fall well below the concensus estimate, I believe the outlook for the coal industry in general remains strong for the foreseeable future. I would recommend adding to our positions in JOYG and BUCY if the selloff produces a better entry point in those stocks. ACI finished today at $48.22 after hitting an intraday high of $52.64. JOYG traded as high as $71.28 before pulling back to close at $69.14. BUCY traded up to $114.93 before falling to $110.41 at the close.
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2 comments:
What do you think about ACF?
I don't know anything about ACF. What do they do?
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