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Will ArcelorMittal (MT) Prove to be a Suitable Value Pick?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put ArcelorMittal (MT - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, ArcelorMittal has a trailing twelve months PE ratio of 12.64. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.31.
If we focus on the long-term trend of the stock the current level puts ArcelorMittal’s current PE among the highs experienced over the past five years. However, we also note that the current PE is a positive figure. This signifies that the stock has come out of its negative earnings territory, as experienced over a long part of the observed period.
Further, the stock’s PE also compares favorably with the highly volatile Zacks classified Steel - Producers industry’s trailing twelve months PE ratio, which stands at 22.17. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers. Further, the graph below also makes it clear that ArcelorMittal’s earnings and/or price movement were comparatively less volatile than the industry at large.
We should also point out that ArcelorMittal has a forward PE ratio (price relative to this year’s earnings) of just 9.97 – lower than the current level. So it is fair to say that a slightly more value-oriented path may be ahead for ArcelorMittal stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, ArcelorMittal has a P/S ratio of about 0.45. This is lower than the Zacks categorized Steel – Producers industry average, which comes in at 0.89 right now.
Notably, MT is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, ArcelorMittal currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes ArcelorMittal a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for ArcelorMittal is just 0.92, a level that is lower than the industry average of 1.36. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 5.13, which is far better than the industry average of 7.67. Clearly, MT is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though ArcelorMittal might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives MT a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, ArcelorMittal seems to have pretty striking prospects.
Meanwhile, the company’s earnings estimates have been trending upwards lately. The current year has seen three estimates go higher in the past sixty days compared to none lower, while the next year estimate has seen two upward revisions and no downward revisions in the same time period.
This has had a meaningful impact on the consensus estimate, as the current year consensus estimate has moved north by 31.3% in the past two months, while the next year estimate has moved higher by 20.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
ArcelorMittal is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 6% out of more than 250 industries) and strong Zacks Rank, ArcelorMittal looks like a strong value contender.
Moreover, over the past one year, the Zacks Steel – Producers industry has clearly outperformed the broader market, as you can see below:
Further, ArcelorMittal should also gain from its efforts to reduce debt, lower cost, expand capacity and improve efficiency. So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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Will ArcelorMittal (MT) Prove to be a Suitable Value Pick?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put ArcelorMittal (MT - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, ArcelorMittal has a trailing twelve months PE ratio of 12.64. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.31.
If we focus on the long-term trend of the stock the current level puts ArcelorMittal’s current PE among the highs experienced over the past five years. However, we also note that the current PE is a positive figure. This signifies that the stock has come out of its negative earnings territory, as experienced over a long part of the observed period.
Further, the stock’s PE also compares favorably with the highly volatile Zacks classified Steel - Producers industry’s trailing twelve months PE ratio, which stands at 22.17. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers. Further, the graph below also makes it clear that ArcelorMittal’s earnings and/or price movement were comparatively less volatile than the industry at large.
We should also point out that ArcelorMittal has a forward PE ratio (price relative to this year’s earnings) of just 9.97 – lower than the current level. So it is fair to say that a slightly more value-oriented path may be ahead for ArcelorMittal stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, ArcelorMittal has a P/S ratio of about 0.45. This is lower than the Zacks categorized Steel – Producers industry average, which comes in at 0.89 right now.
Notably, MT is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, ArcelorMittal currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes ArcelorMittal a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for ArcelorMittal is just 0.92, a level that is lower than the industry average of 1.36. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 5.13, which is far better than the industry average of 7.67. Clearly, MT is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though ArcelorMittal might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives MT a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, ArcelorMittal seems to have pretty striking prospects.
Meanwhile, the company’s earnings estimates have been trending upwards lately. The current year has seen three estimates go higher in the past sixty days compared to none lower, while the next year estimate has seen two upward revisions and no downward revisions in the same time period.
This has had a meaningful impact on the consensus estimate, as the current year consensus estimate has moved north by 31.3% in the past two months, while the next year estimate has moved higher by 20.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
ArcelorMittal Price and Consensus
ArcelorMittal Price and Consensus | ArcelorMittal Quote
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
ArcelorMittal is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 6% out of more than 250 industries) and strong Zacks Rank, ArcelorMittal looks like a strong value contender.
Moreover, over the past one year, the Zacks Steel – Producers industry has clearly outperformed the broader market, as you can see below:
Further, ArcelorMittal should also gain from its efforts to reduce debt, lower cost, expand capacity and improve efficiency. So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>