Alcoa (AA) versus Norsk Hydro ASA (NHYDY) Head to Head Review

Norsk Hydro ASA (OTCMKTS: NHYDY) and Alcoa (NYSE:AA) are both industrial products companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitability, institutional ownership and earnings.

Analyst Ratings

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This is a breakdown of current recommendations and price targets for Norsk Hydro ASA and Alcoa, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Norsk Hydro ASA 1 2 2 0 2.20
Alcoa 0 4 10 0 2.71

Alcoa has a consensus target price of $58.46, suggesting a potential upside of 21.67%. Given Alcoa’s stronger consensus rating and higher probable upside, analysts clearly believe Alcoa is more favorable than Norsk Hydro ASA.

Volatility and Risk

Norsk Hydro ASA has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500. Comparatively, Alcoa has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500.

Dividends

Norsk Hydro ASA pays an annual dividend of $0.11 per share and has a dividend yield of 1.9%. Alcoa does not pay a dividend. Norsk Hydro ASA pays out 22.9% of its earnings in the form of a dividend.

Profitability

This table compares Norsk Hydro ASA and Alcoa’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Norsk Hydro ASA 7.97% 9.50% 6.26%
Alcoa 1.86% 7.20% 3.28%

Institutional and Insider Ownership

0.1% of Norsk Hydro ASA shares are held by institutional investors. 0.0% of Norsk Hydro ASA shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Norsk Hydro ASA and Alcoa’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Norsk Hydro ASA $13.93 billion 0.86 $1.08 billion $0.48 12.17
Alcoa $11.65 billion 0.77 $217.00 million $3.01 15.96

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

Summary

Norsk Hydro ASA beats Alcoa on 10 of the 16 factors compared between the two stocks.

Norsk Hydro ASA Company Profile

Norsk Hydro ASA (Hydro) is an integrated aluminum company with operations in various activities along the aluminum industry’s value chain. The Company operates through six segments: Bauxite & Alumina, which includes bauxite mining activities, production of alumina and related commercial activities, primarily the sale of alumina; Primary Metal, which includes primary aluminum production and casting activities; Metal Markets, which include sales activities relating to products from the its primary metal plants and operational responsibility for Hydro’s stand-alone remelters, as well as physical and financial metal trading activities; Rolled Products, which include Hydro’s rolling mills; Energy, which includes energy sourcing for Hydro’s aluminum operations around the world, and Other and eliminations, which consists of its captive insurance company Industriforsikring, its industry parks, internal service providers, operation of Sapa and other activities.

Alcoa Company Profile

Alcoa Corporation, formerly Alcoa Upstream Corporation, is engaged in the production of bauxite, alumina and aluminum of various cast and rolled products. The Company is engaged in the production and management of aluminum and alumina combined through its participation in various aspects of the industry, such as technology, mining, refining, smelting, and recycling. The Company’s segments include Bauxite, Alumina, Aluminum, Cast Products, Energy and Rolled Products. The Company’s Bauxite segment represents its global portfolio of bauxite mining assets. The Company’s Alumina segment represents its refining system across the world, and processes bauxite into alumina and sells it directly to internal and external smelter customers across the world. The Company’s Aluminum segment represents its smelter system across the world. Its Energy segment represents its portfolio of energy assets, with power production capacity of approximately 1,685 megawatts.

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