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Bull of the Day: ArcelorMittal (MT)

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Trump’s plans to rebuild America’s infrastructure have sent industrial metals surging post-election. Most steelmakers remain optimistic about the outlook for 2017 in anticipation of rising investments in infrastructure and manufacturing in the US. Can the rally continue?

About the Company

Luxembourg-based ArcelorMittal (MT - Free Report) is the world’s leading steel and mining company with about 114 million tons of annual production capacity and 210,000 employees across 60 countries.

They are the largest producer of steel in North and South America, the EU and Africa and have a growing presence in Asia.

They are also one of the largest producers of iron ore in the world with a global portfolio of 16 operating units with mines in operation or development.

Encouraging Fourth Quarter Results

The company swung to a profit in Q4. They reported a net income of $403 million compared to a net loss of $6.7 billion reported a year ago. The results in the previous year quarter was hurt by impairment charges of roughly $4.7 billion.

Adjusted earnings of $0.16 per share were ahead of the Zacks Consensus Estimate of $0.13.

Revenues through up 1% year over year, were slightly shy of the Zacks Consensus Estimate.

Total steel shipments increased 1.6% year over year while average selling prices went up 3.5%.

“As we enter into 2017, I see there is a positive momentum both in the business and the market,” said the CEO Lakshmi Mittal.

The CEO also hoped that current administration would take action to address the problem of rising cheap imports from China.

Rising Estimates

Analysts have been raising estimates for the steelmaker after much better-than-expected results.

Zacks Consensus Estimates for the current and next year have surged to $0.73 per share and $0.71 per share respectively from $0.65 each, before the report.

 

ArcelorMittal Price and Consensus

ArcelorMittal Price and Consensus | ArcelorMittal Quote

The Bottom Line

In recent years, the company has taken a number of steps to improve its profitability through vertical integration, consolidation and geographical diversification. Rising demand for steel and higher prices and proposed anti-dumping action should continue to support the stock in the coming months.

MT is currently Zacks Rank #1 (Strong Buy) stock. Further the Zacks Industry rank of 32 (out of 265) and Sector Rank of 4 (out of 16) also indicate the potential for outperformance in the short term.

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