Alcoa Q1 2007 earnings preview: Too good to stay public?

Alcoa Inc. (NYSE: AA), one of the world's top producers of aluminum and related products, is set to release its first quarter 2007 results on Tuesday.

The question is, of course, can Alcoa build on its strong fourth quarter 2006 results? Alcoa has offered upside surprises in three of its previous four quarters, and 2006 was the best year in the company's history. So what does 2007 hold?

Among analysts surveyed by Thomson Financial, the consensus on AA is Hold, with 10 of 21 rating it Hold, while another 8 rate it a Buy. The estimates for Q1 2007 are revenue of $8.54 billion, or earnings per share of 77 cents, compared to 74 cents last quarter. Individual EPS estimates range from 64 to 87 cents.

Alcoa's PE ratio is 13.61, which is in line with the industry. Analysts' mean price target is $35.53. The 52-week low was $26.39 in October; the 52-week high $36.96 last May. While AA opened Thursday at $34.50, by mid-day it was flirting with $35.

Alcoa's strength has fueled recent speculation that it may be a possible buyout target, and Jim Cramer has stated that he doesn't think Alcoa will be public by next year. Although it was an analyst's upgrade that pushed AA's share price upward Thursday, Alcoa has also been downgraded recently by Prudential and Credit Suisse.