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ArcelorMittal Up 17% in a Year: What's Driving the Stock?

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Shares of ArcelorMittal (MT - Free Report) have moved up around 16.6% in the past year compared with the industry’s rise of roughly 9.6%.

ArcelorMittal has a market cap of roughly $31.5 billion. Average volume of shares traded in the past three months was around 2,710.4K.  

Let’s take a look at the factors that are driving the steel giant.

Driving Factors

An impressive second-quarter performance along with upbeat outlook and focus on implementing strategic measures are contributing to the rally in ArcelorMittal’s shares.

The company’s profits rose year over year in second-quarter 2018, supported by a spike in steel prices. It 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 jumped roughly 16% 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.

In its second-quarter earnings call, ArcelorMittal stated that it expects global apparent steel consumption growth in the range of 2-3% in 2018, up from the previous 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, it projects apparent steel consumption growth of 2-3% for 2018 (up from 1.5-2.5%), considering 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 likely to rise 1-2% (up from the previous expectation of -0.5% to 0.5%), driven by consistent improvement in real estate demand, ongoing strong machinery and automotive demand as well as partly offset by slowdown in infrastructure.

ArcelorMittal is focused on implementing strategic measures under its Action 2020 plan, which will 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 is on track with cost-reduction actions under the program and is focused on deleveraging its balance sheet. Sustained commitment to reduce debt will lead to lower interest expenses.

ArcelorMittal Price and Consensus


ArcelorMittal Price and Consensus | ArcelorMittal Quote

Zacks Rank & Stocks to Consider

ArcelorMittal currently has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space are Ingevity Corporation (NGVT - Free Report) , Huntsman Corporation (HUN - Free Report) and Celanese Corporation (CE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). 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%. Its shares have surged 61% in the past year.

Huntsman has an expected long-term earnings growth rate of 8.5%. Its shares have returned 20.1% in a year.

Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 23.6% in the past year.

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