NEW YORK (TheStreet) -- ArcelorMittal (MT - Get Report) fell 4.72% to $16.46 on Monday morning after the steel manufacturer reported earnings per share and revenue that were less than analysts' estimates.
The company posted a loss of 31 cents a share, excluding one-time items such as impairment and restructuring charges. This was wider than the Zacks consensus estimate of a loss of 16 cents per share. Revenue also increased 2.8% year over year and 1% sequentially to $19.8 billion, which came up short of the consensus estimate of $20.1 billion.
ArcelorMittal posted a net loss of $1.2 billion, or 69 cents a share, in the fourth quarter, compared to a net loss of $3.8 billion, or $2.47 a share, in the same period one year ago. Steel shipments increased 4.5% year over year to 20.9 million metric tons.
TheStreet Ratings team rates ARCELORMITTAL SA as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
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"We rate ARCELORMITTAL SA (MT) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market, ARCELORMITTAL SA's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite currently having a low debt-to-equity ratio of 0.45, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.44 is very low and demonstrates very weak liquidity.
- In its most recent trading session, MT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- MT, with its decline in revenue, slightly underperformed the industry average of 1.9%. Since the same quarter one year prior, revenues slightly dropped by 0.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- ARCELORMITTAL SA reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ARCELORMITTAL SA swung to a loss, reporting -$2.38 versus $0.86 in the prior year. This year, the market expects an improvement in earnings (-$0.60 versus -$2.38).
- You can view the full analysis from the report here: MT Ratings Report