max21 schreef op 8 oktober 2014 22:05:
www.thestreet.com/story/12907516/1/ho...How Will ArcelorMittal (MT) Stock Be Affected Today by the Sale of Gallatin Steel?
BYTony OwusuFollow | 10/08/14 - 03:42 PM EDT|
submit to reddit CommentLink
Stock quotes in this article: MT
Find out if (MT) is in Cramer's Portfolio.
NEW YORK (TheStreet) -- ArcelorMittal (MT) shares are down 0.3% to $12.76 on Wednesday after the company released a joint statement with Gerdau announcing that they have completed the sale of their respective 50% interests in Gallatin Steel to Nucor Corp (NUE) .
The sale was completed for a total cash consideration of $770 million.
The deal is part of ArcelorMittal's plan to divest its non-core assets as the world's largest steel producer faces a slowdown in Europe which accounts for nearly half of its revenues.
Must Read: Warren Buffett's 25 Favorite Stocks
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
The Gallatin mini-mill in Kentucky melts scrap, pig iron and hot briquetted iron and processes the material into rolled steal at an annual output capacity of about 1.8 million tons.
The deal increases Nucor's flat rolled iron capacity to 13 million tons annually.
TheStreet Ratings team rates ARCELORMITTAL SA as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ARCELORMITTAL SA (MT) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
MT's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 2.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
ARCELORMITTAL SA reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ARCELORMITTAL SA continued to lose money by earning -$1.46 versus -$2.23 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus -$1.46).
The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.41 is very weak and demonstrates a lack of ability to pay short-term obligations.
The gross profit margin for ARCELORMITTAL SA is currently extremely low, coming in at 8.52%. Regardless of MT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MT's net profit margin of 0.25% is significantly lower than the industry average.
Net operating cash flow has decreased to $1,548.00 million or 34.37% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.