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Here's Why ArcelorMittal Should Be in Your Portfolio Now
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ArcelorMittal (MT - Free Report) , world’s leading steel and mining company, has been performing well of late. The company has a market capitalization of about $20.4 billion. The stock has yielded a solid one-year return of around 52.6%. With strong fundamentals and solid long-term growth opportunities, this stock can be a solid bet now.
Strong Q1 Performance & Upbeat Guidance
ArcelorMittal logged a net income of $1,002 million or 33 cents per share in first-quarter 2017, as against a net loss of $416 million or 23 cents recorded a year ago. Earnings beat the Zacks Consensus Estimate of 24 cents.
Revenues went up 20.1% year over year to $16,086 million in the quarter, aided by higher seaborne iron ore reference prices, market-priced iron ore shipments and average steel prices, partly offsetting lower steel shipments.
The company expects global apparent steel consumption (ASC) to rise 0.5–1.5% year over year in 2017. In the U.S., the company sees apparent steel consumption growth of 3–4% in 2017. The company also anticipates modest growth (0.5–1.5%) in apparent steel consumption in Europe. Moreover, apparent steel consumption is forecasted to rise 3–4% in Brazil. Demand for steel in China is likely to stabilize in 2017.
Positive Earnings Surprise History
ArcelorMittal has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 145.19%.
Estimates Moving Up
The company’s estimates for current fiscal 2017 and fiscal 2018, have moved north in the past 60 days, reflecting a positive outlook of analysts on the stock. For the current fiscal, estimates have surged 19.5% to $3 per share in the past 60 days. For fiscal 2018, the Zacks Consensus Estimate has moved up 14% to $2.61.
Solid Zacks Rank & Score
ArcelorMittal currently sports a Zacks Rank #1 (Strong Buy) and also has a VGM score of “A”. Here ‘V’ stands for Value, ‘G’ for Growth and ‘M’ for Momentum. The score is a weighted combination of these three scores. Such a score allow investors to eliminate the negative aspects of stocks and select winners.
Strong Financials
ArcelorMittal ended first quarter with cash and cash equivalents (including restricted cash) of $2.4 billion. Net cash provided by operating activities was roughly $299 million in the reported quarter.
The company’s long-term debt was around $11,047 million as of Mar 31, 2017, down 32.3% year over year. Net debt decreased to $12,097 million at the end of the first quarter from $17,329 million a year ago. Also, the long-term debt-to-capital ratio of the company is 24.6%, lower than industry average of 33.9%.
Growth Prospects
The company plans to expand its steel-making capacity and raw materials self-sufficiency through a combination of brownfield growth, new greenfield projects and acquisition opportunities, mainly in the emerging markets.
ArcelorMittal also recently announced that it is expanding its automotive steel line of products. The company said that it is expanding its global portfolio of automotive steels by launching a new generation of advanced high strength steels (AHSS).
Price Performance
Shares of ArcelorMittal gained about 52.6% in the past one year. Though the company’s shares underperformed the Zacks categorized Steel-Producers industry’s growth of 100.2%, we believe that its efforts to reduce debt, lower costs, expand capacity and improve efficiency bodes well for long-term growth and should drive the stock higher. The expected long-term earnings growth rate is currently pegged at 11.4%, better than the industry average of 8.9%.
Kronos has an expected long-term earnings growth of 5%.
Huntsman has an expected long-term earnings growth of 7%.
Chemours Company has an expected long-term earnings growth of 15.5%.
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Here's Why ArcelorMittal Should Be in Your Portfolio Now
ArcelorMittal (MT - Free Report) , world’s leading steel and mining company, has been performing well of late. The company has a market capitalization of about $20.4 billion. The stock has yielded a solid one-year return of around 52.6%. With strong fundamentals and solid long-term growth opportunities, this stock can be a solid bet now.
Strong Q1 Performance & Upbeat Guidance
ArcelorMittal logged a net income of $1,002 million or 33 cents per share in first-quarter 2017, as against a net loss of $416 million or 23 cents recorded a year ago. Earnings beat the Zacks Consensus Estimate of 24 cents.
Revenues went up 20.1% year over year to $16,086 million in the quarter, aided by higher seaborne iron ore reference prices, market-priced iron ore shipments and average steel prices, partly offsetting lower steel shipments.
The company expects global apparent steel consumption (ASC) to rise 0.5–1.5% year over year in 2017. In the U.S., the company sees apparent steel consumption growth of 3–4% in 2017. The company also anticipates modest growth (0.5–1.5%) in apparent steel consumption in Europe. Moreover, apparent steel consumption is forecasted to rise 3–4% in Brazil. Demand for steel in China is likely to stabilize in 2017.
Positive Earnings Surprise History
ArcelorMittal has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 145.19%.
Estimates Moving Up
The company’s estimates for current fiscal 2017 and fiscal 2018, have moved north in the past 60 days, reflecting a positive outlook of analysts on the stock. For the current fiscal, estimates have surged 19.5% to $3 per share in the past 60 days. For fiscal 2018, the Zacks Consensus Estimate has moved up 14% to $2.61.
Solid Zacks Rank & Score
ArcelorMittal currently sports a Zacks Rank #1 (Strong Buy) and also has a VGM score of “A”. Here ‘V’ stands for Value, ‘G’ for Growth and ‘M’ for Momentum. The score is a weighted combination of these three scores. Such a score allow investors to eliminate the negative aspects of stocks and select winners.
Strong Financials
ArcelorMittal ended first quarter with cash and cash equivalents (including restricted cash) of $2.4 billion. Net cash provided by operating activities was roughly $299 million in the reported quarter.
The company’s long-term debt was around $11,047 million as of Mar 31, 2017, down 32.3% year over year. Net debt decreased to $12,097 million at the end of the first quarter from $17,329 million a year ago. Also, the long-term debt-to-capital ratio of the company is 24.6%, lower than industry average of 33.9%.
Growth Prospects
The company plans to expand its steel-making capacity and raw materials self-sufficiency through a combination of brownfield growth, new greenfield projects and acquisition opportunities, mainly in the emerging markets.
ArcelorMittal also recently announced that it is expanding its automotive steel line of products. The company said that it is expanding its global portfolio of automotive steels by launching a new generation of advanced high strength steels (AHSS).
Price Performance
Shares of ArcelorMittal gained about 52.6% in the past one year. Though the company’s shares underperformed the Zacks categorized Steel-Producers industry’s growth of 100.2%, we believe that its efforts to reduce debt, lower costs, expand capacity and improve efficiency bodes well for long-term growth and should drive the stock higher. The expected long-term earnings growth rate is currently pegged at 11.4%, better than the industry average of 8.9%.
Other Stocks to Consider
Other top ranked stocks in the basic materials space include Kronos Worldwide Inc. (KRO - Free Report) , Huntsman Corporation (HUN - Free Report) and The Chemours Company (CC - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Kronos has an expected long-term earnings growth of 5%.
Huntsman has an expected long-term earnings growth of 7%.
Chemours Company has an expected long-term earnings growth of 15.5%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>