Jim Cramer Expects a Bad Quarter From Arconic

On Tuesday next week after the close, Arconic (ARNC) will report its quarterly results. Although shares are up a whopping a 40% on the year, the stock has still struggled over the past two months, falling 14%.

Arconic is a holding in Jim Cramer’s Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells ARNC? Learn more now.

“I think the quarter will be bad,” TheStreet’s Jim Cramer, manager of the Action Alerts PLUS portfolio, said from the floor of the New York Stock Exchange Friday.

Former CEO Klaus Kleinfeld sent a really ill-advised letter to Paul Singer, the activist investor from Elliott Management that is pushing for change at the company. That cost Kleinfeld his job, Cramer reasoned.

But perhaps this will work out in Arconic’s favor, especially if some of the changes that Elliott is pushing for come to fruition. For instance, Arconic would benefit from beefing up its exposure to the aerospace sector, Cramer reasoned.

While that may be true, it won’t benefit Arconic when it comes to earnings. Cramer isn’t optimistic about the quarter, but said the stock could be a buy if the share price takes a hit.

Alcoa (AA) — the company Arconic split from — reports earnings May 10. Aluminum prices have been better, but buying Alcoa is a bet that China has stopped dumping aluminum, Cramer said.

Meaning, China has been “dumping” a lot of aluminum on the open market, which hurts the commodity’s price as supply overwhelms demand. Since we don’t have a verdict on Chinese dumping, it’s hard to have conviction in Alcoa, he reasoned.

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