On Mar 19, Zacks Investment Research downgraded steel giant
) to a Zacks Rank #5 (Strong Sell).
AK STEEL HLDG (AKS): Free Stock Analysis
ARCELOR MITTAL (MT): Free Stock Analysis
TIMKEN CO (TKR): Free Stock Analysis Report
WORTHINGTON IND (WOR): Free Stock Analysis
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ArcelorMittal, on Feb 7, posted a net loss of $1.2 billion or 69
cents per share for the fourth quarter of 2013, narrower than the
net loss of $3.8 billion or $2.47 per share a year ago, thanks to
lower impairment charges. Adjusted loss, however, was 31 cents
per share, wider than the Zacks Consensus Estimate of a loss of
16 cents per share. For full-year 2013, ArcelorMittal posted a
net loss of $2.5 billion, or $1.46 per share, lower than the net
loss of $3.4 billion, or $2.17 per share recorded in 2012.
ArcelorMittal has delivered negative earnings surprises in three
of the last four quarters, with an average negative surprise of
233.76% for the trailing four quarters.
Revenues rose 2.8% year over year to $19.8 billion in the
reported quarter but missed the Zacks Consensus Estimate of $20.1
billion. For full-year 2013, revenues decreased 5.7% to $79.4
billion in 2013 from $84.2 billion in 2012, mainly due to lower
average steel selling prices.
ArcelorMittal continues to grapple with challenging economic
conditions in Europe. It is also exposed to volatility in steel
pricing and tough competition.
Increased domestic imports, production ramp-ups by peers and
increased Chinese production have led to oversupply in the steel
industry, which in turn, is causing a decline in steel prices.
Moreover, demand for steel remains weak in Europe. Steel demand
fell in Europe in 2013 and is currently about 30% below
pre-crisis levels. ArcelorMittal has closed some its operations
in the region, given slack demand and the weak European economy.
Recovery in the demand environment in the region is expected to
be sluggish this year.
Considering the challenging economic conditions, ArcelorMittal
reduced its annual dividend in 2013. The company intends not to
increase the dividend or ramp-up any major steel growth capital
expenditure until the medium-term $15 billion net debt target has
been achieved and market conditions improve in 2014.
The Zacks Consensus Estimate for 2014 for ArcelorMittal has gone
down roughly 1.07% to 92 cents per share since the fourth-quarter
2013 earnings release. The Zacks Consensus Estimate for 2015 has
also declined 11.25% to $1.42 per share.
Other Stocks to Consider
Stocks in the steel and related industries with a favorable Zacks
AK Steel Holding Corp.
Worthington Industries, Inc.
). While AK Steel carries a Zacks Rank #1 (Strong Buy), Timken
and Worthington Industries hold a Zacks Rank #2 (Buy).