ArcelorMittal (MT) Buy or Sell Stock Guide

Last updated: Jun 25, '18

The analysis below may be helpful to you if you have any of the following questions about MT stock:

  • Is MT a buy or a sell?
  • Should I sell or hold MT stock today?
  • Is MT a good buy / a good investment?
  • What are MT analyst opinions, recommendations, ratings?

Here are MT stock buy reasons/signals:

1. ArcelorMittal outperformed the industry it belongs to over the past year, aided by its strong earnings performance, cost and debt reduction actions and strategic growth measures through its Action 2020 program. The company's shares rallied around 51% over this period while the industry saw a gain of 35%.

2. ArcelorMittal remains focused on reducing debt and lowering costs. These moves are expected to lead to better operational performance in the long run. The company’s net debt declined to $10.1 billion at the end of 2017 from $11.1 billion a year ago, owing to positive free cash flows, leading to lower interest expenses.

3. The company is expanding its steel-making capacity and also remains focused on shifting to high added value products. As part of this move, ArcelorMittal is expanding its automotive steel line of products. The company is expanding its global portfolio of automotive steels by launching a new generation of advanced high strength steels (AHSS).

4. The planned acquisition of Ilva S.p.A. in Italy represents another attractive growth opportunity for the company because of its large- scale low-cost operation. Ilva is expected to be a good investment without compromising on the strength of the company’s balance sheet. It will provide an opportunity to expand leadership and product offering in Italy, the second-largest steel producing and consuming market in Europe.

5. For ArcelorMittal, its mining segment is a significant advantage. It ensures security of raw materials supply to its steel business, enables the company to sell to a growing number of third party customers, allows optimization of supply and logistics savings as well as provides it with an effective hedge against raw material price movements.

6. For ArcelorMittal, its mining segment is a significant advantage. It ensures security of raw materials supply to its steel business, enables the company to sell to a growing number of third party customers, allows optimization of supply and logistics savings as well as provides it with an effective hedge against raw material price movements.

7. MT quarterly revenue growth was 19.30%, higher than the industry and sector average revenue growth (8.95% and 5.14%, respectively).

8. MT profitability is improving. The YoY profit margin change was 6.66pp.

9. MT forward P/E ratio is 8.15, and it’s low compared to its industry peers’ P/E ratios.

10. MT Price/Book ratio is 0.84, and it’s low compared to its industry peers’ P/B ratios.

11. MT Price/Sales ratio is 0.48, and it’s low compared to its industry peers’ P/S ratios.

12. MT average analyst rating is Strong Buy.

13. MT average analyst price target ($41.01) is above its current price ($31.93).

Here are MT stock sell reasons/signals:

1. Concerns over Chinese steel demand is a headwind for the company. Steel demand in the Chinese real estate sector remains soft as evident from the company’s guidance. Iron ore prices may also remain volatile on growing concerns over a potential weaker demand from China.

2. The steel industry remains affected by global production capacity and fluctuations in steel imports/exports and tariffs. Demand for steel remains weak in certain key markets. Challenging conditions persist in Europe and emerging markets such as Brazil. Moreover, there is a demand-supply gap in the United States. Soft construction activity in Brazil remains concern.

3. Cheap steel exports from China, which has built up a massive excess steel capacity, is still causing a problem. High levels of steel exports from the country amid a sluggish economy remain a concern. China’s steel exports shot up roughly 15% on a monthly basis in April, the highest since August 2017, per customs data. Production in China also continues to increase as evident from a surge in steel output during the first three months of 2018.

4. Despite some recovery of late, steel demand in Europe is still well below pre-crisis levels. The recovery in the demand environment is expected to be sluggish in the region in the near term.

What are your thoughts on MT?

If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

Comments (0)expand_more