Zacks Investment Research upgraded
Companhia Siderurgica Nacional
to a Zacks Rank #1 (Strong Buy) on Sep 10, 2013.
Why the Upgrade?
Prospects are bright for the steel industry worldwide as impacts
emanating from the Eurozone crisis and instability in the U.S.
and China have abated, gradually creating more room for growth.
This, in turn, correlates to demand for better infrastructure and
modernized farming techniques, which require steel. According to
the World Steel Association's projection in Apr 2013, estimated
global consumption of steel is likely to grow 2.9% in 2013 and
3.2% in 2014.
Talking of one of the important emerging markets, Brazil, steel
demand is on the rise as the country prepares to host major
sporting events in the coming years. Major investments in
infrastructure are being planned for the development of ports,
railroads, airports, wind farms and roads, among others.
According to the Brazilian Steel Institute (IABr), crude steel
production is likely to increase 5.8% in 2013 coupled with steel
sales rising by 7.6% in the year. We believe the Brazilian steel
companies, including Gerdau and SID, among others, are well
positioned to leverage the rising wave of infrastructural
requirements and are also expected to keep up with the demand
growth in the short-to-medium term.
Also, SID's exposure to iron ore mining, cement, and
infrastructure projects makes it an attractive stock to own. In
the first half 2013, mining sales contributed nearly 22.5% of
consolidated revenues. The company has investment plans to
increase the annual production capacity of the Casa de Pedra mine
to 50 million by 2014. The whole mining sector of SID is likely
to produce 89 million tons of iron ore per year by 2014.
Talking of SID's financial background, the company reported an
impressive second quarter 2013 results with an earnings surprise
of 433.3%. Average earnings surprise of the trailing four
quarters is 183.3%. Additionally, we have an
of 360% for 2013 and 160% for 2014.
In the last 30 days, the Zacks Consensus Estimate for SID has
gone up from a loss per share of 6 cents to earnings per share of
5 cents for 2013 while the consensus estimate for 2014 increased
Others Stocks to Consider
SID currently has a market capitalization of roughly $6.2
billion. Other stocks to watch out for in the industry are
Nippon Steel & Sumitomo Metal Corporation
), with a Zacks Rank #1 (Strong Buy) while
), each come with a Zacks Rank #2 (Buy).
GERDAU SA ADR (GGB): Free Stock Analysis
NIPPON STEEL CP (NSSMY): Get Free Report
CIA SIDERUR-ADR (SID): Free Stock Analysis
TERNIUM SA-ADR (TX): Free Stock Analysis
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