Alcoa vs. Constellium: Which Aluminum Stock has Greater Upside?

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.

Growing demand for lighter and energy-efficient electric vehicles, recycled aluminum and rechargeable batteries has made aluminum an attractive investment. The metal is witnessing higher demand as industries proceed toward the goal of sustainability and efficiency. Also, an increase in 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

Solid momentum in electrical and packaging markets is driving the company’s Aluminum segment’s performance. Also, the restart of the San Ciprián (Spain), Alumar (Brazil) and Lista (Norway) smelters has increased AA’s overall production capacity. Alcoa’s production from the Aluminum segment increased 5% year over year in 2025 to 2,319 kilo metric tons.

Third-party revenues from the Aluminum segment increased 4%, aided by higher volumes and an increase in average realized third-party price. For 2026, Alcoa expects the segment to produce 2.4-2.6 million tonnes, while shipments are projected to be 2.6-2.8 million tonnes.

Alcoa’s Alumina segment is reaping the benefits from strong production and productivity improvement at its refineries. However, the closure of the company’s Kwinana refinery has been affecting its production and shipment volumes. For 2026, alumina production is anticipated to be in the band of 9.7-9.9 million tonnes, while shipments are likely to be 11.8-12.0 million tonnes.

Despite the positives, AA has been grappling with escalating costs and expenses over time. In fourth-quarter 2025, its cost of sales rose 5.2% year over year and represented 82.7% of net sales (up 480 basis points). High raw material, labor and freight costs are pushing up the costs of sales. Escalating costs pose a threat to the company’s bottom line.

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 11% year over year to 265,000 metric tons in fourth-quarter 2025, buoyed by a robust demand environment.

Revenues from the segment increased 34% to $1.35 billion, supported by higher metal prices. Significant orders for packaging and automotive rolled products, driven by growth in demand from packaging and automotive markets, augur well for the segment in the quarters ahead.

Also, strength in the Aerospace & Transportation segment bodes well for CSTM. The segment’s shipments increased 21% year over year to 53,000 metric tons in the fourth quarter. Revenues from the segment increased 23% to $527 million, supported by higher shipments and metal prices. Healthy orders for transportation, industry and defense rolled products are driving the segment’s performance.
The company’s total revenues increased 28% to $2.2 billion compared with the prior-year quarter, driven by strength in the segments and higher metal prices.

Constellium remains committed to rewarding its shareholders handsomely through share buybacks. For instance, the company generated a solid free cash flow of $178 million in 2025 and returned approximately $115 million to shareholders through share repurchases. CSTM also focuses on cost-control measures and successfully lowered leverage to 2.5x at 2025-end.

How Does the Zacks Consensus Estimate Compare for AA & CSTM?

While the Zacks Consensus Estimate for Alcoa’s 2026 sales implies year-over-year growth of 8.3%, the same for earnings per share (EPS) indicates an increase of 37.4%. AA’s EPS estimates have been trending upward over the past 60 days for both 2026 and 2027.

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The Zacks Consensus Estimate for CSTM’s 2026 sales and EPS implies year-over-year growth of 15.6% and 6.8%, respectively. The company’s EPS estimates for both 2026 and 2027 have increased over the past 60 days.

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Price Performance and Valuation of AA & CSTM

In the past year, Alcoa’s shares have gained 82.4%, while Constellium stock has soared 113%.

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Alcoa is trading at a forward 12-month price-to-earnings ratio of 11.84X, below its median of 13.50X over the last three years. Constellium’s forward earnings multiple sits at 11.77X compared with its median of 9.77X over the same time frame.

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Final Take

Constellium’s strength in the packaging and aerospace segments, 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.

In contrast, Alcoa’s strength in electrical and packaging markets has been dented by escalating operating costs and expenses. Also, AA’s expensive valuation warrants a cautious approach for existing investors.

While Constellium sports a Zacks Rank #1 (Strong Buy), Alcoa currently has a Zacks Rank #3 (Hold). Given these factors, CSTM seems a better pick for investors than AA currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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