NEW YORK (TheStreet) -- ArcelorMittal (MT) shares are up 0.5% to $14.70 in early market trading on Tuesday after being upgraded to "outperform" from "neutral" by analysts at Credit Suisse (CS) .
The firm believes that the company's outlook will improve based on its view that the worst of the iron ore price declines are in the past.
Despite the optimistic outlook, the firm also said that they need to see more signs of improvement before they throw their full weight behind the stock and therefore only raised the company's price target to $18 from $17.
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 and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MT's revenue growth has slightly outpaced the industry average of 0.6%. 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 ($0.57 versus -$1.46).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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 8.52%. 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.
- You can view the full analysis from the report here: MT Ratings Report
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