Alcoa Corporation AA and Constellium SE CSTM are two prominent players in the aluminum sector with global operations and diversified portfolios. With aluminum prices remaining high, driven by global economic uncertainties and trade tensions, comparing these two industry participants is particularly relevant for investors seeking exposure to the Zacks Metal Products - Distribution industry.
Aluminum has become an attractive investment over the past few years with growing popularity for lighter and energy-efficient electric vehicles, recycled aluminum and rechargeable batteries. The metal is witnessing increased demand as industries proceed toward the goal of sustainability and efficiency. Furthermore, a recovery in global air travel has led aircraft manufacturers to ramp up production, spurring demand for aluminum alloys for fuselages and wings.
Amid such a backdrop, let’s take a closer look at both the companies’ fundamentals, growth prospects and challenges to find out which one is a better investment today.
The Case for Alcoa
With the increase in aluminum demand, the tariffs on metals are gaining traction. The U.S. administration in March imposed 25% tariffs on all imported steel and aluminum as a measure to correct trade imbalances and boost the domestic industry. While the move has increased steel and aluminum prices, it has not induced a revival in U.S. smelting, the energy-consuming process of aluminum production.
The U.S. aluminum production has been affected lately due to a lack of access to competitively priced electricity, which has led to several smelter closures in the industry. For instance, Alcoa permanently closed its 279,000 metric ton Intalco smelter in March 2023, which had remained idle since 2020. In the first quarter of 2025, AA’s third-party shipments of alumina declined 8%, while total shipments from the Aluminum segment decreased 5% on a sequential basis.
Despite the challenges, the company’s Aluminum segment is expected to benefit from growing demand in the electrical and packaging end markets and continued progress on the Alumar, Brazil smelter restart. For 2025, it expects the Aluminum segment to produce 2.3-2.5 million tonnes, while shipments are anticipated to be in the band of 2.6-2.8 million tonnes.
Alcoa’s Alumina segment has been reaping the benefits from the growing popularity of its Sustana line of products. Last year, AA announced its first sales of EcoSource non-metallurgical alumina. Also, its low-carbon EcoLum primary aluminum currently comprises half of its metal sales in Europe. For 2025, alumina production is anticipated to be in the range of 9.5-9.7 million tonnes, while shipments are likely to be 13.1-13.3 million tonnes.
AA has banked on several strategic actions over the past year to boost its organic growth and simplify its business portfolio. This includes the acquisition of Alumina Limited in August 2024, which enhanced its position as one of the world’s largest bauxite and alumina producers. The buyout will likely provide Alcoa with long-term value creation with greater financial and operational flexibility. Also, recently, the company made progress with stakeholders to improve the production capacity and long-term outlook of its San Ciprian site.
The Case for Constellium
The strongest driver of Constellium’s business at the moment is the Packaging & Automotive Rolled Products segment. The segment’s shipments increased 2% year over year to 269,000 metric tons in first-quarter 2025, buoyed by a robust demand environment. Revenues from the segment increased 17% to $1.2 billion, supported by higher metal prices.
Significant orders for packaging rolled products, driven by growth in demand from packaging and automotive markets, augur well for the segment in the quarters ahead. The company’s total revenues increased 5% to $2 billion compared with the prior-year quarter, driven by strength in the segment and higher metal prices.
The company is well-positioned to leverage its market-leading position and capitalize on the solid demand for aluminum products with increased investments in its production capacity and efficiency. CSTM has also been investing in its recycling capacity in France.
Constellium remains committed to rewarding its shareholders handsomely through share buybacks. For instance, in February 2024, the company’s board approved a three-year share repurchase program of up to $300 million of its outstanding shares. Since the inception of the repurchase program, it has repurchased around 6.1 million shares for approximately $93 million. Exiting, the first quarter, CSTM had approximately $206 million remaining under the share repurchase program.
However, lower shipments of aerospace and transportation, industry and defense (TID) rolled products have been affecting its Aerospace & Transportation segment’s performance. In the first quarter, the segment’s shipments decreased 11% year over year to 51,000 metric tons, which resulted in a 2% decline in revenues. Demand in the aerospace and automotive industries is likely to remain muted in the near term, which might continue to affect its overall performance.
How Does the Zacks Consensus Estimate Compare for AA & CSTM?
While the Zacks Consensus Estimate for Alcoa’s 2025 sales implies year-over-year growth of 4.3%, the same for earnings per share (EPS) indicates an increase of 164.4%. AA’s EPS estimates have been trending downward over the past 60 days for both 2025 and 2026.
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The Zacks Consensus Estimate for CSTM’s 2025 sales and EPS implies year-over-year growth of 7.2% and 184.2%, respectively. The company’s EPS estimates for both 2025 and 2026 have increased over the past 60 days.
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Price Performance and Valuation of AA & CSTM
In the past six months, Alcoa’s shares have lost 32.7%, while Constellium stock has gained 6.6%.
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Alcoa is trading at a forward 12-month price-to-earnings ratio of 9.12X, below its median of 14.47X over the last three years. Constellium’s forward earnings multiple sits at 9.54X, close to its median of 9.51X over the same time frame.
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Conclusion
Alcoa and Constellium have a Zacks Rank #3 (Hold) each, which makes choosing one stock a difficult task. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alcoa’s strength in electrical and packaging end markets has been dented by constrained production and lower shipments of aluminum and alumina. Also, AA’s downward earnings estimate revisions warrant a cautious approach for existing investors.
In contrast, Constellium’s strength in the Packaging & Automotive Rolled Products segment, along with its growth investments and shareholder-friendly policies, bodes well for strong growth in the quarters ahead. Additionally, CSTM’s upward earnings estimates appear to be appealing and instill investor confidence. Given these factors, CSTM seems a better pick for investors than AA currently.
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