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Why Should You Add ArcelorMittal (MT) to Your Portfolio Now?
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ArcelorMittal’s (MT - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s take a look into the factors that make this steel giant an attractive investment option.
What’s Working in Favor of MT?
Solid Rank & VGM Score: ArcelorMittal currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: ArcelorMittal has outperformed the industry over a year. The company’s shares have gained around 12% over this period, compared with roughly 9.4% rise recorded by the industry.
Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value steel stocks, ArcelorMittal is currently trading at trailing 12-month EV/EBITDA multiple of 4.5, cheaper compared with the industry average of 6.7.
Estimates Northbound: Annual estimates for ArcelorMittal have moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 14.3% to $5.44 per share. The Zacks Consensus Estimate for 2019 has also moved up 12.2% over the same timeframe to $5.07.
Strong Q2 & Buoyant Outlook: ArcelorMittal saw its profits jump in second-quarter 2018, supported by a spike in steel prices. The company recorded net income of $1,865 million or $1.83 per share, up from $1,322 million or $1.29 in the year-ago quarter.
Revenues also went up roughly 16% year over year to $19,998 million in the quarter on the back of higher average steel selling prices, market-priced iron ore shipments, seaborne iron ore reference prices and steel shipments.
ArcelorMittal, in its second-quarter call, said that it now expects global apparent steel consumption to grow in the range of 2-3% in 2018, up from the previous growth expectation of 1.5-2.5%. The company noted that market conditions are favorable and demand environment continues to be positive along with healthy steel spreads.
In the United States, the company projects apparent steel consumption growth of 2-3% in 2018 (up from 1.5-2.5% expected earlier), factoring in higher construction and machinery demand. The company also anticipates 2-3% growth in apparent steel consumption in Europe, up from 1-2% expected earlier, supported by strength across construction and machinery end-use markets.
Apparent steel consumption in China is also expected to increase 1-2% (up from -0.5% to 0.5%) in 2018, driven by consistent improvement in real estate demand, ongoing strong machinery and automotive demand, partly offset by slowdown in infrastructure.
ArcelorMittal remains focused on implementing strategic measures under its Action 2020 plan to drive profitability. The plan is a strategic roadmap for each of the company’s key segments, which targets a structural EBITDA improvement of about $3 billion. The company also remains on track with its cost-reduction actions under the program and is focused on deleveraging its balance sheet. Sustained commitment to reduce debt is leading to lower interest expenses.
Ingevity has an expected long-term earnings growth rate of 12%. The company’s shares have rallied around 77% in a year.
Huntsman has an expected long-term earnings growth rate of 8.5%. The company’s shares have rallied around 22% in a year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have shot up roughly 20% over a year.
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Why Should You Add ArcelorMittal (MT) to Your Portfolio Now?
ArcelorMittal’s (MT - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s take a look into the factors that make this steel giant an attractive investment option.
What’s Working in Favor of MT?
Solid Rank & VGM Score: ArcelorMittal currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: ArcelorMittal has outperformed the industry over a year. The company’s shares have gained around 12% over this period, compared with roughly 9.4% rise recorded by the industry.
Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value steel stocks, ArcelorMittal is currently trading at trailing 12-month EV/EBITDA multiple of 4.5, cheaper compared with the industry average of 6.7.
Estimates Northbound: Annual estimates for ArcelorMittal have moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 14.3% to $5.44 per share. The Zacks Consensus Estimate for 2019 has also moved up 12.2% over the same timeframe to $5.07.
Strong Q2 & Buoyant Outlook: ArcelorMittal saw its profits jump in second-quarter 2018, supported by a spike in steel prices. The company recorded net income of $1,865 million or $1.83 per share, up from $1,322 million or $1.29 in the year-ago quarter.
Revenues also went up roughly 16% year over year to $19,998 million in the quarter on the back of higher average steel selling prices, market-priced iron ore shipments, seaborne iron ore reference prices and steel shipments.
ArcelorMittal, in its second-quarter call, said that it now expects global apparent steel consumption to grow in the range of 2-3% in 2018, up from the previous growth expectation of 1.5-2.5%. The company noted that market conditions are favorable and demand environment continues to be positive along with healthy steel spreads.
In the United States, the company projects apparent steel consumption growth of 2-3% in 2018 (up from 1.5-2.5% expected earlier), factoring in higher construction and machinery demand. The company also anticipates 2-3% growth in apparent steel consumption in Europe, up from 1-2% expected earlier, supported by strength across construction and machinery end-use markets.
Apparent steel consumption in China is also expected to increase 1-2% (up from -0.5% to 0.5%) in 2018, driven by consistent improvement in real estate demand, ongoing strong machinery and automotive demand, partly offset by slowdown in infrastructure.
ArcelorMittal remains focused on implementing strategic measures under its Action 2020 plan to drive profitability. The plan is a strategic roadmap for each of the company’s key segments, which targets a structural EBITDA improvement of about $3 billion. The company also remains on track with its cost-reduction actions under the program and is focused on deleveraging its balance sheet. Sustained commitment to reduce debt is leading to lower interest expenses.
ArcelorMittal Price and Consensus
ArcelorMittal Price and Consensus | ArcelorMittal Quote
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Ingevity Corporation (NGVT - Free Report) , Huntsman Corporation (HUN - Free Report) and Celanese Corporation (CE - Free Report) each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingevity has an expected long-term earnings growth rate of 12%. The company’s shares have rallied around 77% in a year.
Huntsman has an expected long-term earnings growth rate of 8.5%. The company’s shares have rallied around 22% in a year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have shot up roughly 20% over a year.
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>>