Constellium vs. Alcoa: Which Aluminum Stock Looks More Promising?

Constellium SE CSTM and Alcoa Corporation AA are leading players in the aluminum industry, backed by extensive global operations and diversified business portfolios. With aluminum prices staying elevated amid ongoing economic uncertainty and trade-related challenges, comparing these companies can help investors evaluate opportunities within the Zacks Metal Products - Distribution industry.Aluminum has become an attractive investment opportunity in recent years, supported by growing demand from lightweight and energy-efficient electric vehicles, increased adoption of recycled aluminum and advancements in rechargeable battery technologies. Demand for the metal continues to increase as industries focus on sustainability and efficiency. The ongoing recovery and expansion of global air travel have led aircraft manufacturers to ramp up production, driving demand for aluminum alloys used in aircraft fuselages and wings.Against this 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 ConstelliumConstellium’s Packaging & Automotive Rolled Products segment continues to be a key growth driver for the business. In the first quarter of 2026, revenues from the segment surged 24%, driven by higher metal prices. An increase in orders for packaging rolled products is also driving the segment’s performance. Also, strength in the Aerospace & Transportation segment is aiding CSTM. The segment’s shipments increased 18% to 60 thousand metric tons in the first quarter, driven by higher shipments of aerospace and transportation, industry and defense (TID) rolled products. Revenues from the segment increased 30% to nearly $609 million, supported by strong shipments and metal prices.The company’s Automotive Structures & Industry segment’s revenues grew 9% to approximately $415 million, supported by higher metal prices.CSTM also remains committed to rewarding its shareholders handsomely through share buybacks. For instance, it generated a solid free cash flow of $5 million in the first three months of 2026 and returned approximately $28 million to shareholders through share repurchases. It’s worth noting that the company’s board authorized a new share buyback program recently to repurchase up to $300 million worth of shares. This program will be effective from May 21, 2026, till Dec. 31, 2028. CSTM ended the quarter with leverage of 2.2x, remaining within the company’s target range of 1.5-2.5x.However, Constellium has been witnessing the impacts of escalating costs and expenses over time. In the first quarter, the cost of sales increased 18.9% year over year. Selling, general and administrative expenses also rose 24.4% in the year. The increase in operating expenses, if not controlled, might adversely impact the company’s margins in the quarters ahead.The Case for AlcoaAlcoa is gaining from strength in its Aluminum segment, driven by healthy demand across packaging, electrical and transportation end markets. The segment’s production capacity has expanded following the restart of the San Ciprián smelter in Spain, Alumar in Brazil and Lista in Norway. In the first quarter of 2026, the Aluminum segment’s third-party sales rose to $2.54 billion from $1.91 billion reported in the prior-year quarter.In May 2026, Alcoa announced a $65 million investment to enhance production capabilities at its Mosjøen smelter in Norway. The project will enable the integration of recycled aluminum into the casting process and increase production capacity by up to 75,000 metric tons. The investment is expected to strengthen Alcoa’s low-carbon aluminum portfolio, improve alloy flexibility and help meet growing demand from the automotive and packaging sectors across Europe. The expansion will be carried out in phases, with commissioning and production ramp-up anticipated through 2028.The company is also gaining from U.S. tariffs on imported aluminum, which have strengthened domestic market conditions. In June 2025, the U.S. administration increased tariffs on imported aluminum to 50% as a measure to correct trade imbalances and boost the domestic industry. The move has also increased aluminum prices, thus benefiting domestic producers like Alcoa. For first-quarter 2026, aluminum product sales rose to $2.58 billion from $1.96 billion in the year-ago quarter.Its Alumina segment is poised to gain from higher alumina shipments, driven by the restart of San Ciprián smelter. AA expects alumina production in 2026 to be in the range of 9.7-9.9 million tons, while shipments are anticipated to be 11.8-12.0 million tons.However, Alcoa has been witnessing the impacts of escalating costs and expenses over time. In the first quarter, the cost of sales increased 3% year over year. The metric, as a percentage of net sales, increased 630 bps to 78.7%. Selling, general and administrative expenses also rose 16.9% in the year. The increase in operating expenses, if not controlled, might adversely impact the company’s margins in the quarters ahead.The company’s high debt level also remains concerning. AA exited the first quarter with a total debt of $2.55 billion compared with $2.45 billion reported at the end of fourth-quarter 2025. Considering its high debt level, its cash and cash equivalents of $1.35 billion do not look impressive.How Does the Zacks Consensus Estimate Compare for CSTM & AA?The Zacks Consensus Estimate for CSTM’s 2026 sales and earnings per share (EPS) implies year-over-year growth of 26.3% and 74%, respectively. The company’s EPS estimates for 2026 have increased over the past 60 days.Image Source: Zacks Investment ResearchWhile the consensus estimate for Alcoa’s 2026 sales implies year-over-year growth of 21.4%, the same for EPS indicates an increase of 109.3%. AA’s EPS estimates have been trending upward over the past 60 days for 2026.Image Source: Zacks Investment ResearchPrice Performance and Valuation of CSTM & AAIn the past six months, Constellium’s shares have surged 92.4%, while Alcoa stock has gained 47.7%.Image Source: Zacks Investment ResearchConstellium is trading at a forward 12-month price-to-earnings ratio of 11.57X compared with its median of 10.04X over the last three years. Alcoa is trading at a forward 12-month price-to-earnings ratio of 8.71X, below its median of 11.56X over the last five years.Image Source: Zacks Investment ResearchFinal TakeConstellium is seeing strong growth across its key business segments, supported by higher aluminum prices. Also, the company’s shareholder-friendly policies bode well for strong growth in the quarters ahead.Alcoa is benefiting from strong demand across key end markets and expanded production capacity, supported by smelter restarts and investments in low-carbon aluminum. However, rising operating costs and a high debt burden remain key concerns for its margins.Given these factors, CSTM seems a better pick for investors than AA currently. While Constellium sports a Zacks Rank #1 (Strong Buy), Alcoa currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks