Monday, July 23, 2012

Alcoa Beats Reduced Q2 Earnings And Implications For The Broader Market

[First appeared on Seeking Alpha on July 10, 2012]

Alcoa's (AA) earnings release after the close on Monday marked the beginning of Q2 2012 earnings season. We plan to profile several key companies during earnings season to better understand how their management teams view demand in their specific markets as well as growth across the globe. Many companies and sell-side equity analysts have already reduced their earnings projections for Q2 and the rest of 2012, so we are not expecting to hear a lot of exciting stories over the next few weeks.

Instead, we want to find out if expectations are now low enough that companies can beat these numbers and if investors will react positively to the Q2 numbers. If expectations are low enough, then the market may be at a turning point and could rally. Alcoa's Q2 earnings are a good way to start to gauge market expectations and company performance as we enter the second half of the year. We are going to analyze Alcoa's earnings using a 5 question earnings checklist, which we will also use for other companies in the future.

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