Overview: Alcoa Corporation reported QQ3 2025 revenue of $2.995 billion, up 3.13% year over year, but gross profit and margin deteriorated sharply to $140 million and 4.67% respectively, indicating intensified cost pressure or mix effects within a volatile aluminum market. EBITDA stood at $360 million (12.0% margin), while operating income was $51 million (1.70% margin). Net income was $232 million, benefiting from a negative income tax expense of $51 million. Earnings per share were $0.90 basic and $0.88 diluted, on 258.9 million weighted-average shares.
Liquidity and capital structure: The company carries a moderate balance sheet with a current ratio of 1.56, quick ratio of 0.91, and cash ratio of 0.44. Debt to capitalization is 28.9%, debt ratio 16.1%, and interest coverage is 1.55x, highlighting cash generative capability but with modest buffer against rising financing costs. Free cash flow per share is $0.255 and operating cash flow per share is $0.985, underscoring ongoing cash generation despite margin compression. The dividend yield is ~0.31% with a payout ratio of 11.2%. Valuation indicators show the stock trading at P/E ~9.2x, P/S ~2.84x, and P/B ~1.34x, suggesting a valuation discount relative to many industrial peers but reflecting cyclical risk and margin sensitivity.
Strategic takeaways: The quarter confirms Alcoa’s exposure to aluminum cycles and energy intensity, with topline growth offset by margin erosion. The company’s cash flow generation remains robust enough to support modest shareholder returns and deleveraging potential, though leverage and coverage metrics imply sensitivity to commodity cycles and energy costs. Investors should monitor aluminum price trends, energy- commodity input costs, and any operational cost optimization initiatives that could restore margin discipline.