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ArcelorMittal (MT) Up 22% in 6 Months: What's Driving the Stock?
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ArcelorMittal (MT - Free Report) has seen its shares pop roughly 22% over the last six months. The company has also outperformed its industry’s gain of around 13% to over the same time frame.
ArcelorMittal has a market cap of roughly $32.2 billion and average volume of shares traded in the last three months is around 3,477K. The company has an expected long-term earnings per share growth of 13.4%, higher than the industry average of 11.8%.
Let’s take a look into the factors that are driving this steel behemoth.
Driving Factors
Forecast-topping earnings performance in the last reported quarter, upbeat outlook and the company’s internal initiatives have contributed to a rally in ArcelorMittal’s shares. The company’s adjusted earnings of 90 cents per share for fourth-quarter 2017 topped the Zacks Consensus Estimate of 80 cents, translating into a 12.5% positive surprise.
In fact, ArcelorMittal has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of around 39.4%. ArcelorMittal is also gaining from its efforts to reduce debt, lower costs, expand capacity and improve efficiency.
ArcelorMittal, during the fourth-quarter earnings call, noted that the market conditions are favorable and demand environment remains positive along with healthy steel spreads. The company expects global apparent steel consumption (ASC) to grow in the range of 1.5-2.5% in 2018.
In the United States, the company expects ASC growth of 1.5-2.5% in the year, factoring in higher construction and machinery demand. The company also anticipates 1-2% growth in ASC in Europe. Moreover, ASC is forecasted to rise around 6.5-7.5% in Brazil as the economy is expected to turnaround with improved consumer confidence as construction recovers.
ASC in China increased 3.5% in 2017 and is expected to remain close to this level this year as weakness in the real estate sector to be partly offset by strong infrastructure and automotive end markets.
ArcelorMittal remains focused on implementing strategic measures under its Action 2020 plan to drive profitability. The Action 2020 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. Moreover, it remains highly focused on deleveraging its balance sheet and sustained commitment to cut debt is leading to lower net interest expenses. The company’s net debt declined to $10.1 billion at the end of 2017 from $11.1 billion a year ago.
ArcelorMittal is also expanding its global portfolio of automotive steels by launching a new generation of advanced high strength steels. The launch of these steels is in line with the Action 2020 program.
Also, in sync with the Action 2020 plan, ArcelorMittal has announced a three-year investment program of roughly $1 billion at its Mexican operations. The investment, which is geared toward improving the quality and efficiency of operations, will allow ArcelorMittal Mexico to produce 2.5 million tons of flat rolled steel that will be supplied to customers of domestic non-auto and general industry.
ArcelorMittal currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report) and Eastman Chemical Company (EMN - Free Report) .
LyondellBasell carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 9%. Its shares have rallied around 18% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2 (Buy). Its shares have gained around 32% over a year.
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ArcelorMittal (MT) Up 22% in 6 Months: What's Driving the Stock?
ArcelorMittal (MT - Free Report) has seen its shares pop roughly 22% over the last six months. The company has also outperformed its industry’s gain of around 13% to over the same time frame.
ArcelorMittal has a market cap of roughly $32.2 billion and average volume of shares traded in the last three months is around 3,477K. The company has an expected long-term earnings per share growth of 13.4%, higher than the industry average of 11.8%.
Let’s take a look into the factors that are driving this steel behemoth.
Driving Factors
Forecast-topping earnings performance in the last reported quarter, upbeat outlook and the company’s internal initiatives have contributed to a rally in ArcelorMittal’s shares. The company’s adjusted earnings of 90 cents per share for fourth-quarter 2017 topped the Zacks Consensus Estimate of 80 cents, translating into a 12.5% positive surprise.
In fact, ArcelorMittal has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of around 39.4%. ArcelorMittal is also gaining from its efforts to reduce debt, lower costs, expand capacity and improve efficiency.
ArcelorMittal, during the fourth-quarter earnings call, noted that the market conditions are favorable and demand environment remains positive along with healthy steel spreads. The company expects global apparent steel consumption (ASC) to grow in the range of 1.5-2.5% in 2018.
In the United States, the company expects ASC growth of 1.5-2.5% in the year, factoring in higher construction and machinery demand. The company also anticipates 1-2% growth in ASC in Europe. Moreover, ASC is forecasted to rise around 6.5-7.5% in Brazil as the economy is expected to turnaround with improved consumer confidence as construction recovers.
ASC in China increased 3.5% in 2017 and is expected to remain close to this level this year as weakness in the real estate sector to be partly offset by strong infrastructure and automotive end markets.
ArcelorMittal remains focused on implementing strategic measures under its Action 2020 plan to drive profitability. The Action 2020 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. Moreover, it remains highly focused on deleveraging its balance sheet and sustained commitment to cut debt is leading to lower net interest expenses. The company’s net debt declined to $10.1 billion at the end of 2017 from $11.1 billion a year ago.
ArcelorMittal is also expanding its global portfolio of automotive steels by launching a new generation of advanced high strength steels. The launch of these steels is in line with the Action 2020 program.
Also, in sync with the Action 2020 plan, ArcelorMittal has announced a three-year investment program of roughly $1 billion at its Mexican operations. The investment, which is geared toward improving the quality and efficiency of operations, will allow ArcelorMittal Mexico to produce 2.5 million tons of flat rolled steel that will be supplied to customers of domestic non-auto and general industry.
ArcelorMittal currently carries a Zacks Rank #3 (Hold).
ArcelorMittal Price and Consensus
ArcelorMittal Price and Consensus | ArcelorMittal Quote
Stocks to Consider
Better-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report) and Eastman Chemical Company (EMN - Free Report) .
Kronos sports a Zacks Rank #1 (Strong Buy) and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 44% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
LyondellBasell carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 9%. Its shares have rallied around 18% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2 (Buy). Its shares have gained around 32% over a year.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>