For the long term, the market likes the new-found ability for Alcoa (NYSE:AA) to raise prices on a number of its products, something it hasn't been able to do over the last couple of years, until recently.
If a company can raise prices it means it has market and competitive strength, something that Alcoa does have at this time, even if it's somewhat tenuous in the aftermath of the earthquake in Japan, which could dramatically affect aluminum demand in the auto and tech industries.
The other good news is Alcoa did spend its time wisely during the worst part of the recession, focusing on cutting costs, as it was about the only thing they could do it had control over. They do have more room to improve there, but it has made them more competitive as a result.
Now that they're leaner, they can raise price in a way that increases earnings, and not just to keep up with rising input costs. That bodes well for the company and shareholders if the company can maintain this position and the economy and markets cooperate.
Alcoa was trading at $17.61, falling $0.05, or 0.25 percent, as of 2:21 PM EDT.
No comments:
Post a Comment