Markets

Alcoa Stock Drops After Earnings Miss Estimates

By Conrad Aenlle

Updated on: July 11, 2011 / 6:23 PM EDT / MoneyWatch

Alcoa reported earnings from continuing operations, excluding special items, of 32 cents a share for the second quarter after the stock market closed on Monday. Reaction was vehement yet somehow also mixed: The stock (AA) immediately fell after the announcement, then rose, then fell again. It was down 1.19 percent from its closing price, at $15.72 a share, about two hours after the close of regular trading, extending a loss for the day of 2.87 percent.

The reason for the indecision apparently was that the 32-cent figure was either exactly what analysts were expecting or slightly below. As Mark Gongloff mentioned in his Wall Street Journal blog post, Alcoa was forecast to earn anywhere from 32 cents to 34 cents. A slight miss wouldn't mean the end of the world, but Gongloff also noted that the consensus estimate had been coming down lately; it had been 36 cents a share, according to the research firm FactSet, at the end of May and 35 cents as recently as June 30.

Alcoa is nothing special. There is at least one other company with a five-letter name that starts with A that investors and traders follow far more closely. But the aluminum producer is the first major company to report earnings each quarter, so it commands more interest than it would if its earnings came out a week after they do.

In any case, the broad stock market does tend to get a lift when Alcoa beats Wall Street estimates, which it had done with impressive regularity during the last year. The miss on Monday could send the market lower in coming days.

Considering how short Wall Street's attention span is, it's likely that other developments will supercede Alcoa's earnings soon enough. But with no resolution in sight to the deficit talks in Washington, and Italy apparently joining Greece on the list of countries with great food and weather and the capability of bringing the European financial system to its knees, those other developments may not provide much solace.