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5 Reasons to Add ArcelorMittal (MT) Stock to Your Portfolio

ArcelorMittal 's MT stock looks promising at the moment. The company has seen its shares pop roughly 19% over the past six months. If you haven't taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let's take a look into the factors that make this steel behemoth a compelling choice for investors right now.

What Makes MT an Attractive Pick?

Solid Rank & VGM Score: ArcelorMittal currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.

An Outperformer: ArcelorMittal has trounced the industry it belongs to over a year. The company's shares have rallied around 28.6% over this period, compared with roughly 16.4% gain recorded by the industry. 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.

Positive Earnings Surprise History: ArcelorMittal has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 39.4%.

Attractive Valuation: 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 5.4, cheaper compared with the industry average of 8.8.

Growth Drivers in Place: 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.

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 Price and Consensus

ArcelorMittal Price and Consensus | ArcelorMittal Quote

Other Stocks to Consider

Other top-ranked companies in the basic materials space include Kronos Worldwide, Inc. KRO , LyondellBasell Industries N.V. LYB and Eastman Chemical Company EMN .

Kronos sports a Zacks Rank #1 and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 39% 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. Its shares have gained around 29% over a year.

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ArcelorMittal (MT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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