MidnightTrader Earnings Play: Alcoa

Alcoa (AA | Quote | Chart | News | PowerRating) is set to report its Q2 results after today's close, and analysts polled by Thomson Financial expect the company to report a profit of $0.66 per share on revenue of $7.36 billion.

In looking back at Alcoa's session-to-session performance following after-hours earnings events, shares demonstrate a slight tendency toward wider next-day moves on the heels of evening financials, doing so in nine of the past 17 quarters. In the near-term, the performance is has shifted slightly, with three narrower moves in the last four quarters.

Looking deeper into the performance data, longs may want to be wary of betting with any evening upside moves. AA has seen an earnings-driven after-hours gain in nine of the 17 quarters we've tracked over the last five years. In six of those quarters the after-hours gain has narrowed or reversed into the red in the following day's regular session.

Shorts may get a better look at AA tonight as the stock has a consistent tendency to add to its earnings-driven after-hours decline in next-day regular session action. AA has recorded an after-hours decline in eight of the 17 quarters we've tracked, and six times that decline has widened for deeper losses by the following day's regular session close.

On April 7, 2008, AA edged up 0.03% in after-hours trade after the company missed the Street's estimates by a penny-a-share but beat revenue estimates. The gain reversed the following day with shares ending lower by 0.7%.

On Jan. 9, 2008, the stock gained 3.2% after AA reported ahead of the Street with Q4 and FY sales. The gain was clipped to 0.6% the next day.

On Oct. 9, 2007, AA edged up 0.3% in after-hours trade after beating on sales but missing on earnings. It turned south the following day, losing 2.4% by the closing bell.

On July 9, 2007, AA dipped 0.7% in night trade after Q2 profits slipped from a year ago on lower-than-expected sales. Shares eased further the next day, closing the regular session down 1.6%.

On April 10, 2007, AA came off a trading halt and edged up 2.2% after topping Q1 estimates. However, shares could not hold onto that momentum and closed the following day session up only 0.5%.

On Jan. 9, 2007, AA gained 4.7% in the evening hours after the company reported ahead of the Street and the year-ago period with Q4 results. The stock gained 6% the next day.

Brooks McFeely is widely regarded as the leading expert on extended-hours trading. He is a Managing Partner for Brochet Capital Partners, LP and the founder of Midnight Trader, Inc. (www.midnighttrader.com), the leading provider of pre-market and after-hours trading analysis and news to retail and institutional investors.