How Would ArcelorMittal (MT) Stock React To A Deal for Italy's Ilva?

NEW YORK (TheStreet) -- ArcelorMittal  (MT) sent a non-binding expression of interest for troubled Italian steelmaker Ilva, trade union sources told Reuters.

Ilva runs Europe's biggest steel plant in the southern Italian city of Taranto but has for some time been at the center of an environmental scandal, according to Reuters.

It was put under special administration last year after magistrates seized $11 billion from its owners, the Riva family, amid allegations the plant's toxic emissions caused abnormally high rates of cancer, Reuters said.

 

Shares of ArcelorMittal are slightly lower at $13.88.

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, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MT's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for ARCELORMITTAL SA is currently extremely low, coming in at 8.86%. 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 -1.03% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly decreased to -$471.00 million or 55.96% 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.
  • You can view the full analysis from the report here: MT Ratings Report

EXCLUSIVE OFFER: See inside Jim Cramer’s multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE.

More from Markets

Goldman to Continue I-Bank Dominance; Netflix Bonds Draw Attention - ICYMI

Goldman to Continue I-Bank Dominance; Netflix Bonds Draw Attention - ICYMI

Texas Instruments CEO Resigns After Violating Code of Conduct

Texas Instruments CEO Resigns After Violating Code of Conduct

Video: Here's How Goldman Sachs May Change Under David Solomon

Video: Here's How Goldman Sachs May Change Under David Solomon

Abbott's Capital Flexibility in Focus Ahead of Earnings Release

Abbott's Capital Flexibility in Focus Ahead of Earnings Release

Markets Close Higher After Fed Chair Powell's Capitol Hill Testimony

Markets Close Higher After Fed Chair Powell's Capitol Hill Testimony