Aluminum producer Alcoa tops earnings expectations, stock rises

Yahoo Finance Live anchors discuss second-quarter earnings for Alcoa.

Video Transcript

JULIE HYMAN: Let's get back to earnings here in the US because there's some interesting sort of big takeaways from some of these numbers. Aluminum producer Alcoa is one of them. The company beat on both the top and bottom line. The shares are up by 5.5% here. And this is even after we have seen aluminum prices fall this year. They're down by about 13%. That's due at least, in part, to what's been happening in China with shutdowns there, with questions about how demand is doing.

The company is also doing a big buyback and so that also-- $500 million is what they're adding to their buyback authorization, so that helps the shares as well. It's just it's the opposite of Carnival, right?

BRIAN SOZZI: Yes.

JULIE HYMAN: You add more supply to the market, price goes down. You take away supply from the market, or you promise to take supply right from the market, price goes up.

BRIAN SOZZI: We were just talking about Europe and have been all show. Check out what Alcoa CEO-- maybe Alcoa is back to being that bellwether type of stock or company. Roy Harvey is the CEO of Alcoa.

He says on the call yesterday, let's see, we look at demand and we continue to see growth this year. There's lots of uncertainty. There's lots of questions, particularly around Europe and, of course, China with COVID. So there's the potential that we continue to see customers stepping away or lowering their demand. So on one hand, he's saying things look OK now but perhaps things could fall off a cliff later this year.

BRAD SMITH: Right, and at a time where they're also saying that output can remain consistent. In the second quarter they produced 3.23 million metric tons. And then aluminum produced 499,000 metric tons. That is consistent with their first quarter output.

And then, additionally, the shipments, the outbound transportation logistics, they did improve in the second quarter. So on the supply chain and the logistics element of that, they're still being able to get product through. It's just about who's actually continuing to order as they're continuing to kind of maintain capacity at this point in time.

JULIE HYMAN: Yeah, we've got to watch across all the metals, too, to see what's going to end up happening with copper, which I know you've been watching--

BRIAN SOZZI: They're [? order ?] book.

JULIE HYMAN: --closely.

BRIAN SOZZI: Full [? order ?] book, Alcoa says.

JULIE HYMAN: Oh, interesting.

BRAD SMITH: It is--