Highlights

  • Alcoa shows 33.68% one-year basic EPS growth, a P/E of 6.58 and PEG of 0.83.
  • Third quarter net income attributable to Alcoa was $483 million, against $232 million.
  • Alcoa generated $643 million in cash from operations; free cash flow was $472 million.
  • Alcoa issued $1.5 billion and $1.1 billion of senior notes to fund the AliGroup acquisition.

An undervalued growth stock pairs earnings growth with its P/E and PEG ratios, and Alcoa (NYSE:AA) shows all three: basic earnings per share grew 33.68% over one year, the trailing twelve-month P/E ratio is 6.58 and the PEG ratio, on an expected basis, is 0.83, with shares trading at USD 39.68 on October 28, 2026, down 0.63%. Alongside those figures, the bauxite, alumina and aluminum producer completed two senior notes offerings on September 23, saw South32 shareholders approve the AliGroup acquisition on October 15, and reported third quarter 2026 net income attributable to Alcoa of $483 million the same day.

Based in Pittsburgh, Pennsylvania, and incorporated in Delaware, Alcoa describes itself as a global industry leader in bauxite, alumina and aluminum products. It reports two segments, Alumina and Aluminum, with operations that include the Pinjarra refinery in Australia. Alcoa has agreed to acquire South32 Limited's interests in certain bauxite, alumina and aluminum assets, referred to as AliGroup.

Growth: Third Quarter 2026 Earnings, Revenue and Production

Net income attributable to Alcoa was $483 million in the third quarter of 2026, against $407 million in the second quarter of 2026 and $232 million in the third quarter of 2025. For the nine months it was $1,315 million against $944 million. Third quarter basic earnings per share were $1.83 against $0.88, and diluted earnings per share were $1.81 against $0.88.

Revenue was $3,704 million in the third quarter against $2,995 million a year earlier. Alumina production rose 11 percent sequentially to 2.5 million metric tons, and Aluminum production rose 2 percent to 649,000 metric tons. Adjusted EBITDA excluding special items, a non-GAAP measure, was $789 million, against $901 million in the second quarter and $270 million a year earlier.

Valuation: P/E of 6.58, PEG of 0.83 and Cash Generation

The P/E ratio of 6.58 is measured on trailing twelve-month earnings, and the PEG ratio of 0.83 on expected growth. Adjusted net income, a non-GAAP measure, was $485 million, or $1.82 per share, against an adjusted loss of $6 million in the third quarter of 2025.

Cash provided from operations was $643 million and capital expenditures were $171 million, leaving free cash flow, a non-GAAP measure, of $472 million. On the earnings call, Chief Executive Officer William Oplinger said the company structured the AliGroup consideration so that pro forma leverage approximates 1.5 times, and that reducing debt will be the priority after closing.

Capital and Balance Sheet: Senior Notes, Cash and Net Debt

On September 23, 2026, Alcoa completed offerings of $1.5 billion of 6.625 percent senior notes due 2034 and $1.1 billion of 6.875 percent senior notes due 2036. It plans to use the proceeds, with cash on hand, to fund the cash consideration of approximately $3.1 billion for AliGroup plus related fees.

Cash and cash equivalents were $4,408 million at September 30, 2026, against $1,597 million at December 31, 2025, including $2.6 billion of acquisition financing. Net debt, a non-GAAP measure, was $414 million against $851 million.

Alcoa also agreed to sell portions of the Massena East, New York site, with potential proceeds of up to $315 million, of which approximately $50 million to $65 million is expected at a closing anticipated within six months.

Disclosed Risks and Outlook for Fourth Quarter and 2026

Aluminum shipments decreased 5 percent sequentially, and lower aluminum prices partially offset lower production costs and higher alumina prices. Management said on the call that a fatality occurred on September 16 at the Alumar smelter in Brazil, and that mining approvals for the Western Australia mine plans are taking longer than expected, with the process now extending into 2027.

Alcoa listed risks to the AliGroup transaction, including unmet closing conditions and governmental delay. The Massena East closing is subject to permitting and regulatory approvals.

For 2026, Alcoa reaffirmed Alumina segment production of 9.5 to 9.6 million metric tons and shipments of 11.5 to 11.6 million, and Aluminum segment production of 2.4 to 2.6 million and shipments of 2.6 to 2.8 million. It expects higher production and shipments in both segments in the fourth quarter, with higher raw material costs and planned maintenance weighing on Aluminum segment adjusted EBITDA by approximately $30 million sequentially. Full-year interest expense is expected to approximate $185 million, up from the prior projection. The company expects the AliGroup acquisition to close in the first half of 2027.