ArcelorMittal (MT) Hits New 52-Week High: What's Driving It?

By Zacks Investment ResearchStock MarketsDec 21, 2017 08:16PM ET

www.investing.com/analysis/arcelormittal-mt-hits-new-52week-high-whats-driving-it-200275419

ArcelorMittal (MT) Hits New 52-Week High: What's Driving It?

By Zacks Investment Research | Dec 21, 2017 08:16PM ET

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Shares of ArcelorMittal (NYSE:MT) scaled a fresh 52-week high of $32.92 on Dec 21, before eventually closing the day at $32.79.

ArcelorMittal has a market cap of roughly $33.3 billion. Average volume of shares traded in the last three months is around 3,946.8K. The company has an expected long-term EPS growth of 11.2%.

Shares of ArcelorMittal have rallied 31.5% in the last three months, outperforming the industry’s 18.2% growth.

Driving Factors

ArcelorMittal delivered solid results in third-quarter 2017. The company saw its profits grow around 77% year over year to roughly $1.2 billion or $1.18 per share in the quarter. Earnings per share also topped the Zacks Consensus Estimate of 86 cents.

Notably, the company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of around 42.1%.

In its third-quarter earnings call, ArcelorMittal stated that market conditions are favorable and demand environment remains positive along with healthy steel spreads. It continues to see global apparent steel consumption to grow in the range of 2.5-3% for 2017.

Steel market conditions have improved lately, driven by favorable developments on steel trade cases across the United States and Europe in the recent past, providing reprieve to steel producers including ArcelorMittal. The overall demand fundamentals for steel also remain healthy. ArcelorMittal also gained from higher steel prices in the third quarter, driven by strong pricing in Europe – the company’s biggest market.

The company remains focused on implementing strategic measures under its Action 2020 plan to drive profitability. The Action 2020 plan, a strategic roadmap for each of the company’s key segments, targets a structural EBITDA improvement of about $3 billion. Upon full achievement of the plan, the company expects to deliver free cash flow of more than $2 billion annually.

ArcelorMittal also remains on track with its cost-reduction actions under the Action 2020 program. The program contributed $900 million to operating results in 2016 and is expected to make a healthy contribution in 2017.

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.

Moreover, the company has cut net debt by nearly 45% over the past five years and net debt fell by $0.2 billion year over year in the third quarter. The company remains highly focused on deleveraging its balance sheet and sustained commitment to cut debt is leading to lower net interest expenses.

ArcelorMittal Price and Consensus

ArcelorMittal Price and Consensus | ArcelorMittal Quote

Zacks Rank & Key Picks

ArcelorMittal currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Westlake Chemical Corporation (NYSE:WLK) , Daqo New Energy Corp. (NYSE:DQ) and Kronos Worldwide Inc. (NYSE:KRO) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Westlake Chemical has an expected long-term earnings growth rate of 10.6%. Its shares have risen 84.9% year to date.

Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have surged a whopping 148.8% year to date.

Kronos Worldwide has an expected long-term earnings growth rate of 5%. Its shares have rallied 119.4% year to date.

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Kronos Worldwide Inc (KRO): Free Stock Analysis Report

Westlake Chemical Corporation (WLK): Free Stock Analysis Report

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ArcelorMittal (MT): Free Stock Analysis Report

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ArcelorMittal (MT) Hits New 52-Week High: What's Driving It?

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