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ArcelorMittal's (MT) Stock Rallies 127% in 6 Months: Here's Why
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ArcelorMittal’s (MT - Free Report) shares have shot up 127% over the past six months. The steel giant has also outperformed its industry’s rise of 80.6% over the same time frame. Moreover, it has topped the S&P 500’s 19.3% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
What’s Going in MT’s Favor?
Forecast-topping earnings performance in the fourth quarter and upbeat outlook for 2021 have contributed to the run-up in ArcelorMittal’s shares. The company swung to a profit in the fourth quarter on the back of improved market conditions and higher steel selling prices. Adjusted earnings of 18 cents per share topped the Zacks Consensus Estimate of 8 cents.
The company, in its fourth-quarter call, said that it envisions global apparent steel consumption (“ASC”) to grow 4.5-5.5% in 2021. This compares with a contraction of 1% in 2020. The global steel industry is now benefiting from a favorable supply-demand balance that is supporting rising utilization as demand recovers. ArcelorMittal expects ASC to grow year over year in 2021 in all of its core markets based on this positive outlook.
ArcelorMittal is seeing a rebound in demand, especially in automotive, following the easing of lockdown measures. Moreover, the company is expanding its steel-making capacity and remains focused on shifting to high-added-value products. Its cost-reduction initiatives will also support profitability.
The company has revealed a new $1 billion fixed cost reduction program which it expects to complete by the end of next year. The program includes actions to improve productivity and maintenance efficiency, and rationalize support functions. The company noted that the plan includes a 20% reduction in corporate office headcount. ArcelorMittal expects to achieve the majority of the savings in 2021. Roughly 40% of these savings are expected to be achieved through productivity.
ArcelorMittal should also gain from higher steel prices. Its average steel selling prices went up around 6% year over year in the fourth quarter of 2020 and boosted bottom line. Strengthening end-market demand, tight supply and higher raw material costs are driving steel prices. Higher steel prices should support its bottom line in 2021.
Earnings estimates for ArcelorMittal have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased 62.5%. The consensus estimate for 2022 has also been revised 39.4% upward over the same time frame.
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and United States Steel Corporation (X - Free Report) .
Nucor has a projected earnings growth rate of 122.5% for the current year. The company’s shares have surged around 151% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fortescue has a projected earnings growth rate of 107.8% for the current fiscal. The company’s shares have surged around 187% in a year. It currently sports a Zacks Rank #1.
U.S. Steel has an expected earnings growth rate of 201.1% for the current year. The company’s shares have surged around 312% in the past year. It currently carries a Zacks Rank #2 (Buy).
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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ArcelorMittal's (MT) Stock Rallies 127% in 6 Months: Here's Why
ArcelorMittal’s (MT - Free Report) shares have shot up 127% over the past six months. The steel giant has also outperformed its industry’s rise of 80.6% over the same time frame. Moreover, it has topped the S&P 500’s 19.3% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
What’s Going in MT’s Favor?
Forecast-topping earnings performance in the fourth quarter and upbeat outlook for 2021 have contributed to the run-up in ArcelorMittal’s shares. The company swung to a profit in the fourth quarter on the back of improved market conditions and higher steel selling prices. Adjusted earnings of 18 cents per share topped the Zacks Consensus Estimate of 8 cents.
The company, in its fourth-quarter call, said that it envisions global apparent steel consumption (“ASC”) to grow 4.5-5.5% in 2021. This compares with a contraction of 1% in 2020. The global steel industry is now benefiting from a favorable supply-demand balance that is supporting rising utilization as demand recovers. ArcelorMittal expects ASC to grow year over year in 2021 in all of its core markets based on this positive outlook.
ArcelorMittal is seeing a rebound in demand, especially in automotive, following the easing of lockdown measures. Moreover, the company is expanding its steel-making capacity and remains focused on shifting to high-added-value products. Its cost-reduction initiatives will also support profitability.
The company has revealed a new $1 billion fixed cost reduction program which it expects to complete by the end of next year. The program includes actions to improve productivity and maintenance efficiency, and rationalize support functions. The company noted that the plan includes a 20% reduction in corporate office headcount. ArcelorMittal expects to achieve the majority of the savings in 2021. Roughly 40% of these savings are expected to be achieved through productivity.
ArcelorMittal should also gain from higher steel prices. Its average steel selling prices went up around 6% year over year in the fourth quarter of 2020 and boosted bottom line. Strengthening end-market demand, tight supply and higher raw material costs are driving steel prices. Higher steel prices should support its bottom line in 2021.
Earnings estimates for ArcelorMittal have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased 62.5%. The consensus estimate for 2022 has also been revised 39.4% upward over the same time frame.
ArcelorMittal Price and Consensus
ArcelorMittal price-consensus-chart | ArcelorMittal Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and United States Steel Corporation (X - Free Report) .
Nucor has a projected earnings growth rate of 122.5% for the current year. The company’s shares have surged around 151% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fortescue has a projected earnings growth rate of 107.8% for the current fiscal. The company’s shares have surged around 187% in a year. It currently sports a Zacks Rank #1.
U.S. Steel has an expected earnings growth rate of 201.1% for the current year. The company’s shares have surged around 312% in the past year. It currently carries a Zacks Rank #2 (Buy).
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>