Earnings Previews: Alcoa, Charles Schwab, Goldman Sachs, Truist

Earnings season for the September quarter got underway with reports Wednesday morning from JPMorgan, Delta Air Lines and BlackRock. Investors were less than stupefied with the results, taking JPMorgan down by more than a percentage point and Delta down by more than three points. Only BlackRock appeared to exceed some expectations.

After markets close Wednesday, Taiwan Semiconductor, United Healthcare and Walgreens are scheduled to report quarterly results. We also have previewed Thursday morning reports from BofA, Citi, Morgan Stanley, U.S. Bank and Wells Fargo.

Here’s a look a one report due out after markets close Thursday and three due out before markets open on Friday.

Alcoa

Aluminum producer and refiner Alcoa Inc. (NYSE: AA) has added 280% to its share price over the past 12 months, including more than doubling since the beginning of the year. On Tuesday, aluminum prices hit their highest level since 2008. Because aluminum requires so much electricity to refine (if it were a country, the aluminum industry would be the world’s fifth-largest consumer of electricity), production has been slowed as countries, particularly China, search for ways to curb industrial consumption of electricity. If supplies are cut, prices are likely to rise even higher. Alcoa reports results after markets close Thursday.

Alcoa doesn’t attract much attention from analysts. Only 11 cover the stock, but eight of those have a Buy or Strong Buy rating on the stock. The other three rate the shares at Hold. At a recent price of around $47.90, the stock’s upside potential based on a median price target of $56.50 is 18%. At the high target of $63, the upside potential is 31.5%.

Third-quarter revenue is forecast to reach $2.92 billion, which would be up 2.9% sequentially and 23% year over year. Adjusted earnings per share (EPS) are forecast at $1.80, up 21% sequentially and 780% year over year. For the full year, EPS are currently estimated to reach $6.20, compared to a loss of $1.16 a year ago, on revenue of $11.83 billion, up 27.3%.

Alcoa stock trades at 7.6 times expected 2021 EPS, 7.7 times estimated 2022 earnings and 8.6 times estimated 2023 earnings. The stock’s 52-week range is $11.41 to $52.45. Alcoa does not pay a dividend.

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Charles Schwab

Charles Schwab Corp. (NYSE: SCHW) has grown its price by about 103% over the past 12 months. As with Goldman Sachs, growth flattened out after early June, and Schwab’s share price has increased by only about 2.3% since then. The company’s market cap of around $144 billion ranks second in the capital markets industry, ahead of Goldman Sachs (about $130 billion market cap) and behind Morgan Stanley ($176 billion). Schwab reports third-quarter results before markets open Friday.

Analysts are mostly bullish on the stock, with 10 of 16 rating the shares a Buy or Strong Buy and the rest giving the stock Hold ratings. At a price of around $75.20, the upside potential based on a median price target of $87 is 15.7%. At the high target of $98, the upside potential reaches 30.3%.

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