The firm said in a research note Friday that iron ore, a key ingredient in making steel, could average $66 a metric ton this year, down from an earlier estimate of $80. This marks Goldman Sachs' first reduction on its 2015 prediction since March 2013, according to Bloomberg.
UBS and Citigroup also issued bearish notes on the iron ore industry earlier this month.
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Iron ore prices plummeted 47% in 2014 amid an oversupply and a pledge from major iron ore producers not to reduce output.
Separately, 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 impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins, a generally disappointing performance in the stock itself and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 ($0.29 versus -$1.46).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 111.4% when compared to the same quarter one year prior, rising from -$193.00 million to $22.00 million.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, ARCELORMITTAL SA has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Despite currently having a low debt-to-equity ratio of 0.48, 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 0.40 is very low and demonstrates very weak liquidity.
- The gross profit margin for ARCELORMITTAL SA is currently extremely low, coming in at 9.49%. 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 0.10% is significantly lower than the industry average.
- You can view the full analysis from the report here: MT Ratings Report