Alcoa (NYSE:AA) and Constellium (NYSE:CSTM) Critical Analysis

Alcoa (NYSE:AA) and Constellium (NYSE:CSTM) are both industrials companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, risk, earnings, dividends and analyst recommendations.

Risk & Volatility

Alcoa has a beta of 2.25, indicating that its stock price is 125% more volatile than the S&P 500. Comparatively, Constellium has a beta of 1.69, indicating that its stock price is 69% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Alcoa and Constellium, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alcoa	1	5	7	0	2.46
Constellium	0	0	3	0	3.00

Alcoa currently has a consensus price target of $41.23, suggesting a potential upside of 33.23%. Constellium has a consensus price target of $19.00, suggesting a potential upside of 36.49%. Given Constellium’s stronger consensus rating and higher probable upside, analysts clearly believe Constellium is more favorable than Alcoa.

Profitability

This table compares Alcoa and Constellium’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alcoa	7.86%	19.27%	7.44%
Constellium	0.92%	7.74%	1.34%

Earnings & Valuation

This table compares Alcoa and Constellium”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alcoa	$11.90 billion	0.67	$60.00 million	$3.83	8.08
Constellium	$7.34 billion	0.27	$56.00 million	$0.46	30.26

Alcoa has higher revenue and earnings than Constellium. Alcoa is trading at a lower price-to-earnings ratio than Constellium, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

92.6% of Constellium shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Alcoa beats Constellium on 9 of the 13 factors compared between the two stocks.

About Alcoa

Alcoa Corporation, together with its subsidiaries, produces and sells bauxite, alumina, and aluminum products in the United States, Spain, Australia, Iceland, Norway, Brazil, Canada, and internationally. The company operates through two segments, Alumina and Aluminum. It engages in bauxite mining operations; and processes bauxite into alumina and sells it to customers who process it into industrial chemical products, as well as aluminum smelting and casting businesses. The company offers primary aluminum in the form of alloy ingot or value-add ingot to customers that produce products for the transportation, building and construction, packaging, wire, and other industrial markets; and flat-rolled aluminum in the form of sheet, which is sold primarily to customers that produce beverage and food cans. In addition, it owns hydro power plants that generates and sells electricity in the wholesale market to traders, large industrial consumers, distribution companies, and other generation companies. The company was formerly known as Alcoa Upstream Corporation and changed its name to Alcoa Corporation in October 2016. The company was founded in 1886 and is headquartered in Pittsburgh, Pennsylvania.

About Constellium

Constellium SE, together with its subsidiaries, engages in the design, manufacture, and sale of rolled and extruded aluminum products for the packaging, aerospace, automotive, defense, and other transportation and industry end-markets. The company operates through three segments: Packaging & Automotive Rolled Products, Aerospace & Transportation, and Automotive Structures & Industry. The Packaging & Automotive Rolled Products segment produces rolled aluminum products, including can stock and closure stock for the beverage and food industry, as well as foil stock for the flexible packaging market. This segment also supplies automotive body sheets and heat exchangers for the automotive market; and specialty reflective sheets. The Aerospace & Transportation segment provides rolled aluminum products, including aerospace plates, sheets, and extrusions; and aerospace wing skins, as well as plates and sheets for use in transportation, industry, and defense applications. The Automotive Structures & Industry segment offers extruded aluminium products and aluminium structural components for the automotive industry, including crash-management systems, body structures, side impact beams, and battery enclosures; and fabricates hard and soft alloy extruded profiles for various industry applications in the automotive, engineering, rail, and other transportation end markets. This segment also provides downstream technology and services, which include pre-machining, surface treatment, research and development, and technical support services. It sells its products directly or through distributors in France, Germany, the Czech Republic, the United Kingdom, Switzerland, and the United States, as well as Shanghai, and Seoul. The company was incorporated in 2010 and is headquartered in Paris, France.