Dow Jones Industrial Average (.DJI), Alcoa Inc (AA): The First U.S. Utility and an Industry Doomed by the PC

An American industry titan hits the growth wall
The Dow Jones Industrial Average (INDEXDJX:.DJI) is nothing if not discerning. Every component it has added (prior to the NASDAQ Composite (INDEXNASDAQ:.IXIC)‘s creation) has been a member of the NYSE Euronext (NYSE:NYX). In many cases, a dominant company joins the Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI) within a few years of graduating to the Big Board from lesser exchanges, as was the case with Alcoa Inc (NYSE:AA) , which began trading on the NYSE Euronext (NYSE:NYX) on June 11, 1951.

Alcoa Inc (NYSE:AA) in 1951 was midway between its momentous antitrust victory of 1945 and its ascent to the Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI), which it accomplished in 1959. The aluminum titan rolled into the NYSE Euronext (NYSE:NYX) on the strength of net earnings that had doubled since its 1949 fiscal year from $20.9 million to $46.9 million. Its expansion plans had brought the first new aluminum plant built since the end of World War II to production status in 1950 as well, which helped boost annual revenue by more than $100 million year over year to $481 million. Sixty years later, its top and bottom lines had grown to $21 billion and $254 million, respectively, highlighting both the growing demand for aluminum products and Alcoa Inc (NYSE:AA)’s difficulty in keeping its costs under control as foreign producers encroach on its territory. The discrepancy between Alcoa Inc (NYSE:AA)’s 6.5% annualized revenue growth rate and its tepid 2.9% annualized income growth over this period helps to explain why Alcoa Inc (NYSE:AA) has become one of the Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI)’s weakest stocks in recent years.

The article The First U.S. Utility and an Industry Doomed by the PC originally appeared on Fool.com is written by Alex Planes.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool recommends Exelon and NYSE Euronext.

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