A Fresh Look at Alcoa’s Valuation After Kwinana Refinery Closure Decision

Alcoa (NYSE:AA) has announced that it will permanently close its Kwinana alumina refinery in Western Australia. The decision is driven by factors such as the facility's age, operating costs, and market pressures, and will directly affect Alcoa's refining capacity and regional operations.

See our latest analysis for Alcoa.

Alcoa’s decision comes after a period of renewed momentum for its shares, with a 27% jump in the 90-day share price return and a recent 1-week gain of over 7%. While the year-to-date share price return remains slightly negative, the five-year total shareholder return of nearly 200% highlights the company’s substantial long-term value creation. Short-term sentiment has shifted quickly in response to major operational changes such as the Kwinana closure.

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With shares rebounding and targets rising after the Kwinana closure, investors now face a key question: does Alcoa offer hidden value after these changes, or has the market already priced in its next chapter of growth?

Most Popular Narrative: 10% Undervalued

Alcoa’s most widely followed narrative places its fair value above the last close of $36.25, highlighting a modest undervaluation. This prompts a deeper look at the factors that shape this outlook.

Persistent tariff-related market volatility, combined with Alcoa's contractual obligations limiting its ability to flexibly redirect Canadian production, may compress net margins for several quarters, especially if regional price premiums fail to fully offset heightened costs.

Read the complete narrative.

Curious what’s fueling these bullish targets? The narrative points to profit margins and a growth runway that could surprise most skeptics. The full story? Only a handful have seen the bold assumptions that support Alcoa’s price target moving higher.

Result: Fair Value of $36.64 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, strong global demand for aluminum and Alcoa’s advances in low-carbon products could offset margin pressures and challenge the case for persistent undervaluation.

Find out about the key risks to this Alcoa narrative.

Build Your Own Alcoa Narrative

If you think the numbers point in a different direction or prefer drawing your own conclusions, it only takes a few minutes to build your own perspective. Do it your way

A great starting point for your Alcoa research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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