Alcoa Corporation Common Stock (AA)

FairStock Score: 53/100 — MIXED

Key Financials

Strengths

• Generates $1.1 billion in annual free cash flow (6.1% yield on market cap)
• Solid return on equity of 15.4% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.37, providing financial flexibility
• Established organization with 14,900 employees providing operational scale

Concerns

• Revenue declining at 1.1% year-over-year signals potential demand weakness or market share loss
• Altman Z-Score of 1.4 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Alcoa Corporation Common Stock is a mid-cap basic materials company valued at $17.6 billion. The business generates $12.7 billion in annual revenue with a 3.4% net margin and $1.1 billion in free cash flow. From a quality standpoint, Alcoa shows distressed Altman Z-Score of 1.4 warrants caution and adequate 15% ROE. On valuation, the stock is reasonably priced at 16.8x earnings, with trades above its Graham Number with a negative 48% margin. Growth dynamics show revenue growing at -1.1% and profit growth of 5.5%. Our composite FairStock Score of 53/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $1.1 billion in annual free cash flow (6.1% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the basic materials space. Sluggish -1% growth in a large-cap company leaves the stock vulnerable to de-rating if the market rotates toward higher-growth opportunities.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer