What Makes ArcelorMittal (MT) Stock a Solid Choice Right Now
ArcelorMittal’s MT stock looks promising at the moment. The company is expected to benefit from improved market conditions, expansion moves and cost-improvement actions. 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.
ArcelorMittal 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.
Let’s delve deeper into the factors that make this steel giant an attractive choice for investors right now.
Estimates Northbound
Over the past two months, the Zacks Consensus Estimate for ArcelorMittal for 2023 has increased around 37.5%. The consensus estimate for 2024 has also been revised 7.8% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Positive Earnings Surprise History
ArcelorMittal’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being 99.8%.
Valuation Looks Attractive
ArcelorMittal’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
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 2.37, cheaper compared with the industry average of 6.07.
Growth Drivers in Place
ArcelorMittal is expected to benefit from improved demand conditions in 2023 following aggressive destocking. Apparent demand conditions improved once the destocking phase reached its maturity in the first quarter of 2023. The company stated that the absence of further destocking is likely to maintain stronger apparent demand in 2023 compared to 2022. It sees world apparent steel consumption, excluding China, to rise by 2-3% year over year in 2023. ArcelorMittal also expects its steel shipments to grow by roughly 5% year over year in 2023.
Moreover, the company is expanding its steel-making capacity and remains focused on shifting to high-added-value products. As part of this move, ArcelorMittal is expanding its automotive steel line of products. The company is expanding its global portfolio of automotive steels by launching a new generation of advanced high-strength steels
The company’s cost-improvement initiatives will also support profitability. MT, in 2022, set out a new value plan worth $1.5 billion to maintain cost position, to be achieved over three years. The plan is focused on creating value through commercial and operational improvements. These include volume, mix and variable cost improvement. The company realized improvements of $0.4 billion from actions taken in 2022.
The recent acquisition of Companhia Siderurgica do Pecem (“CSP”) in Brazil also brings the opportunity for further expansions, including the potential to boost primary steelmaking capacity (including direct reduced iron) and rolling and finishing capacity. Moreover, it offers significant operational and financial synergies. Given its location, CSP also offers an opportunity to establish a new center for producing low-carbon steel, capitalizing on the state of Ceara's desire to establish a low-cost, green hydrogen hub in Pecem.
ArcelorMittal Price, Consensus and EPS Surprise
ArcelorMittal price-consensus-eps-surprise-chart | ArcelorMittal Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation NUE, PPG Industries, Inc. PPG and Linde plc LIN.
Nucor currently carries a Zacks Rank #2. The Zacks Consensus Estimate for NUE’s current-year earnings has been revised 13.4% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nucor beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 10.8% on average. NUE’s shares have gained roughly 17% in the past year.
PPG Industries currently carries a Zacks Rank #2. The Zacks Consensus Estimate for PPG's current-year earnings has been revised 11.7% upward in the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 6.8%, on average. PPG has gained around 16% in a year.
Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days.
Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. LIN’s shares have gained roughly 16% in the past year.
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ArcelorMittal (MT) : Free Stock Analysis Report
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