Alcoa and Texas Capital Shine with Strong Q3 Earnings Surprises
Aluminum producer Alcoa AA and financial holding company Texas Capital Bancshares TCBI demonstrated impressive performance after exceeding third quarter earnings forecasts on Thursday.
Both companies showcased remarkable growth on their profits compared to the same time last year, making them potential picks for investors.
Highlights from Alcoa’s Q3 Earnings
Zacks Rank #3 (Hold)
Aluminum prices have surged by +20% this year, now exceeding $2,600 per tonne. This increase, coupled with Alcoa’s ability to manage raw material costs, significantly improved its profit margins. The adjusted net income for Q3 reached $135 million, translating to $0.57 per share, a dramatic turnaround from an adjusted loss of -$1.14 a share a year earlier. This result far exceeded EPS estimates of $0.23 by 148%.
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Although Q3 sales were $2.9 billion, slightly below estimates of $2.99 billion (by -3%), it still represented an 11% increase from $2.6 billion in the same quarter last year. Impressively, Alcoa has beaten earnings expectations in three of its last four quarterly reports, reflecting an average EPS surprise of 51.52%. Analysts predict a strong recovery for Alcoa’s bottom line in fiscal years 2024 and 2025.
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Texas Capital’s Q3 Performance
Zacks Rank #1 (Strong Buy)
Before its Q3 report, Texas Capital garnered attention due to consistently positive earnings estimate revisions, supporting its strong buy rating. The company focuses primarily on middle-market businesses and high-net-worth individuals across major Texas cities such as Dallas, Houston, and Austin.
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Texas Capital achieved a record net fee income in this quarter, rising 38% year over year to $64.8 million. Total net income for Q3 was $74.3 million, or $1.62 per share, marking a 37% increase from $1.18 per share in the previous year and exceeding EPS estimates of $0.97 by 67%. The company’s Q3 sales of $304.91 million topped projections by 9% and increased over 9% from $278.94 million in the same quarter last year.
Though projected earnings may dip by -9% in FY24 due to a more challenging market, forecasts indicate a strong rebound of 39% in FY25, aiming for $4.91 per share.
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Conclusion
Given their strong Q3 results, Alcoa and Texas Capital present interesting investment opportunities. Analysts expect upward revisions in earnings estimates in the near future, enhancing their appeal.
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Alcoa (AA): Free Stock Analysis Report
Texas Capital Bancshares, Inc. (TCBI): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
