Image source: Arconic.
Continue Reading Below
What happened
Shares of value-added aluminum manufacturer Arconic (NYSE: ARNC)are up 10% as of 2:08 p.m. EST Wednesday following the release of its Tuesday earnings report.
So what
More From Fool.com
- Motley Fool Founders Issue New Stock Buy Alert
- Forget GE! Heres how to play the largest growth opportunity in history
- Forget Apple! Heres a Better Stock to Buy
- He Made 21,078% Buying Amazon. Heres His New Pick
Analysts had been expecting theAlcoaspinoff to report $0.23 per share in pro forma profit on $3 billion in revenue in its fiscal fourth-quarter 2016 report last night.Management hit that revenue total on the head, reporting $3 billion in Q4 sales.
As for the profit, though, well, Arconic actually reported a $2.88-per-share loss for the quarter. Management blamed special items related to its just-sundered relationship with Alcoa for the entirety of that loss, however, and argued that "excluding special items, adjusted income from continuing operations" would have been "$0.12 per share."
Continue Reading Below
ADVERTISEMENT
Of course, even if you take those pro forma numbers at face value, they still suggest Arconic missed Wall Street estimates by nearly 50% — but investors don’t seem to mind, and are bidding up Arconic stock regardless.
Now what
Why might that be? You might think it was the guidance — but you’d be wrong there as well.
In conjunction with its earnings (read "losses") announcement, Arconic issued new guidance for 2017 predicting it will take in between $11.8 billion and $12.4 billion in revenue and earn pro forma profits of between $1.10 and $1.20 per share. Problem is, these numbers also fall short of Wall Street expectations, which had been looking for revenue of $12.55 billion, and pro forma profits of $1.33 per share.
Long story short, aside from the uncertain prospect of a new CEO coming in and righting the ship (activist investor Elliott Management is pushing for a management overhaul), there’s little reason for Arconic shares to be soaring as they are today. Now might be a good time for investors to take some profits off the table.
10 stocks we like better than Arconic Inc.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom Bahis Siteleri just revealed what they believe are the 10 best stocks for investors to buy right now… and Arconic Inc. wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of January 4, 2017
Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Our editors found this article on this site using Google and regenerated it for our readers.
