AA

Alcoa is a pure-play upstream aluminum producer (bauxite, alumina, smelting) having its best year of the cycle. FY2025 net income swung to $1.16B from just $60.0M in FY2024, diluted EPS reached $4.37, and operating cash flow nearly doubled (+90.5%) to $1.19B on $12.8B of revenue (+7.9%). Return on equity hit 18.9% and the company has clearly turned the corner after losses of -$651M (FY2023) and -$123M (FY2022). The balance sheet strengthened: cash rose 40.3% to $1.60B, equity grew 18.6% to $6.12B, and long-term debt edged down to $2.44B with near-zero current maturities.

Management spent 2025 transforming the portfolio — monetizing the 25.1% Saudi JV stake for Ma'aden shares plus cash, permanently closing the high-cost Kwinana refinery, forming the San Ciprian JV and restarting that smelter to ~65% of capacity, and setting production records at six sites. These actions reduce structural cost and complexity, which is exactly what a commodity producer needs to widen mid-cycle margins. At $59.37 the stock trades at just 13.6x earnings and 1.2x sales.