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Alcoa Corporation

Intrinsic Value Analysis (Discounted Cash Flow)Industry: Industrial MaterialsSector: Basic Materials

Fair Value Summary

Current Price$46.77
5Y Range-10.51 – -9.55
5Y Selected-10.03
(-) Safety Margin85.90%
5Y Buy Price$-1.41
Upside (to Buy Price)-103.02%
10Y Range-11.47 – -10.19
10Y Selected-10.83
(-) Safety Margin85.90%
10Y Buy Price$-1.53
Upside (to Buy Price)-103.26%

Company Predictability & Safety

MetricValue
Revenue R2 (5Y)0.1671
Revenue R2 (10Y)0.0540
Net Income R2 (5Y)0.0626
Net Income R2 (10Y)0.0514
EBITDA R2 (5Y)0.1345
EBITDA R2 (10Y)0.1003
FCF R2 (5Y)0.1729
FCF R2 (10Y)0.0170
Safety Score0.1410

DA 10-Year Projection

Metric2025202620272028202920302031203220332034
% Growth1.50%1.78%2.06%2.34%2.61%2.89%3.17%3.45%3.72%4.00%
Revenue12,367.1412,587.3412,846.3913,146.4013,489.9013,879.7914,319.4614,812.7915,364.2015,978.77
EBITDA2,408.352,451.232,501.682,560.102,626.992,702.922,788.542,884.612,991.993,111.67
D&A-751.25-764.62-780.36-798.58-819.45-843.13-869.84-899.81-933.30-970.64
EBIT1,657.101,686.611,721.321,761.521,807.541,859.791,918.701,984.802,058.692,141.03
Pro forma Taxes-1,950.04-1,984.76-2,025.61-2,072.92-2,127.08-2,188.56-2,257.88-2,335.67-2,422.62-2,519.52
NOPAT-292.94-298.16-304.29-311.40-319.54-328.77-339.19-350.87-363.93-378.49
Capital Expenditures-469.34-477.69-487.53-498.91-511.95-526.74-543.43-562.15-583.08-606.40
NWC Investment-17.77-21.36-25.13-29.10-33.32-37.82-42.65-47.86-53.49-59.62
(+) D&A751.25764.62780.36798.58819.45843.13869.84899.81933.30970.64
Free Cash Flow-28.80-32.59-36.59-40.83-45.36-50.20-55.43-61.07-67.20-73.87
Diluted Shares Outstanding259,919,674.75259,919,674.75259,919,674.75259,919,674.75259,919,674.75259,919,674.75259,919,674.75259,919,674.75259,919,674.75259,919,674.75

Discounting Periods

MetricDec-25Dec-26Dec-27Dec-28Dec-29Dec-30Dec-31Dec-32Dec-33Dec-34
Period Start9/30/251/1/261/1/271/1/281/1/291/1/301/1/311/1/321/1/331/1/34
Period End12/31/2512/31/2612/31/2712/31/2812/31/2912/31/3012/31/3112/31/3212/31/3312/31/34
Mid-Point11/15/257/2/267/2/277/1/287/2/297/2/307/2/317/1/327/2/337/2/34
Time (t)0.100.461.462.463.464.465.466.467.468.46
Valuation Date1/16/26

Base Case Projected Flows

WACC: 9.10%Terminal Growth: 2.03%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.880.810.740.680.620.570.520.48
PV UFCF-28.55-31.31-32.22-32.96-33.56-34.05-34.45-34.80-35.09-35.36
Raw: -654.43
-463.57
Raw: -1,065.89
-488.51

Base Case Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value-622.16-820.86
(-) Net Debt1,958.001,958.00
Equity Value-2,580.16-2,778.86
(/) Shares Out259.92259.92
Fair Value$-9.93$-10.69
(-) Safety Margin85.90%85.90%
Buy Price$-1.40$-1.51
Current Price$46.77$46.77
Upside (to Buy Price)-102.99%-103.22%

Conservative Projected Flows

WACC: 10.10%Terminal Growth: 1.53%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.870.790.720.650.590.540.490.44
PV UFCF-28.52-31.18-31.79-32.23-32.51-32.69-32.78-32.80-32.79-32.74
Raw: -537.26
-367.06
Raw: -875.04
-369.56

Conservative Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value-523.30-689.59
(-) Net Debt1,958.001,958.00
Equity Value-2,481.30-2,647.59
(/) Shares Out259.92259.92
Fair Value$-9.55$-10.19
(-) Safety Margin85.90%85.90%
Buy Price$-1.35$-1.44
Current Price$46.77$46.77
Upside (to Buy Price)-102.88%-103.07%

Aggressive Projected Flows

WACC: 8.10%Terminal Growth: 2.53%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.890.830.760.710.650.600.560.52
PV UFCF-28.58-31.44-32.66-33.71-34.64-35.47-36.23-36.93-37.59-38.23
Raw: -834.71
-613.22
Raw: -1,359.51
-676.67

Aggressive Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value-774.26-1,022.15
(-) Net Debt1,958.001,958.00
Equity Value-2,732.26-2,980.15
(/) Shares Out259.92259.92
Fair Value$-10.51$-11.47
(-) Safety Margin85.90%85.90%
Buy Price$-1.48$-1.62
Current Price$46.77$46.77
Upside (to Buy Price)-103.17%-103.46%

Reverse DCF: Market Implied Growth

Current Price$46.77
WACC Used9.1%
IMPLIED REVENUE GROWTH108.68%
Metric2027202820292030203120322033203420352036
Implied Revenue27,679.2157,760.75120,534.67251,530.79524,892.441,095,341.352,285,749.554,769,883.879,953,755.4520,771,417.17
Constant Implied Growth108.68%108.68%108.68%108.68%108.68%108.68%108.68%108.68%108.68%108.68%
Implied Free Cash Flow2.775.7812.0525.1552.49109.53228.57476.99995.382,077.14
Discount Factor0.930.810.740.680.620.570.520.480.440.40
Present Value of Implied FCF2.574.668.9217.0632.6362.41119.38228.34436.76835.42

Rolling Historical DCF (Backtest)

Valuation based on actual realized growth.
YearValuation DateActual PriceRealized Growth (5Y)Calculated Fair ValueValuation Delta
20192019-12-31$19.921.43%$20.774.25%
20182018-12-31$26.094.24%$1.08-95.85%
20172017-12-31$52.491.04%$69.9133.19%
20162016-12-31$52.49-2.79%$-55.11-204.99%
20152015-12-31$52.49-1.43%$39.26-25.20%
20142014-12-31$52.491.97%$35.39-32.58%
20132013-12-31$52.490.59%$-9.74-118.55%

Monte Carlo Simulation (1,000 Iterations)

Mean Fair Value
$-10.79
Median
$-10.68
10th Percentile
$-11.54
90th Percentile
$-10.16

Fair Value Distribution

$-15.36 - $-15.07
1
$-15.07 - $-14.78
0
$-14.78 - $-14.49
1
$-14.49 - $-14.20
0
$-14.20 - $-13.91
2
$-13.91 - $-13.62
0
$-13.62 - $-13.33
1
$-13.33 - $-13.04
0
$-13.04 - $-12.74
5
$-12.74 - $-12.45
8
$-12.45 - $-12.16
5
$-12.16 - $-11.87
26
$-11.87 - $-11.58
41
$-11.58 - $-11.29
83
$-11.29 - $-11.00
111
$-11.00 - $-10.71
189
$-10.71 - $-10.42
262
$-10.42 - $-10.13
179
$-10.13 - $-9.84
76
$-9.84 - $-9.55
10