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 delve deeper into the factors that make this steel behemoth an intriguing choice for investors right now.
What’s Working in Favor of MT?
Solid Rank & VGM Score: ArcelorMittal currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 or #2 (Buy), 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 rallied around 39.8% over this period, compared with roughly 32.8% rise recorded by the industry.
Positive Earnings Surprise History: ArcelorMittal has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 40.1%.
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 5.5, cheaper compared with the industry average of 7.8.
Upbeat Prospects: ArcelorMittal, during its first-quarter earnings call, said that market conditions are favorable and demand environment remains positive along with healthy steel spreads. The company continues to expect global apparent steel consumption to grow in the range of 1.5-2.5% in 2018.
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 program contributed $0.6 billion to EBITDA in 2017 with cumulative benefit of $1.5 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 net interest expenses.
ArcelorMittal is also expanding its global portfolio of automotive steels by launching a new generation of advanced high strength steels, in line with the Action 2020 program.
ArcelorMittal, last month, also received the approval of the European Commission (EC) for its planned acquisition of Ilva S.p.A, marking a major milestone and a key step toward the deal closure.
The EC’s approval followed the conclusion of its Phase II probe into the proposed buyout of Ilva. The merger clearance has been granted on the basis that ArcelorMittal has committed to dispose of assets in Romania, Macedonia, Italy, Luxembourg, Belgium and Czech Republic.
ArcelorMittal believes that Ilva will prove to be a good investment without compromising the strength of its 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.
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Westlake Chemical Corporation (WLK - Free Report) , The Chemours Company (CC - Free Report) and FMC Corporation (FMC - Free Report) , each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied roughly 67% over a year.
Chemours has an expected long-term earnings growth rate of 15.5%. The company’s shares have rallied around 34% in a year.
FMC has an expected long-term earnings growth rate of 14.3%. Its shares have gained roughly 19% over a year.
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