Today's Dead Cat Bounce Stock Is ArcelorMittal (MT)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified ArcelorMittal ( MT) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified ArcelorMittal as such a stock due to the following factors:

  • MT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $83.0 million.
  • MT has traded 191,487 shares today.
  • MT is up 3.1% today.
  • MT was down 5.1% yesterday.

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More details on MT:

ArcelorMittal, together with its subsidiaries, operates as an integrated steel and mining company worldwide. The company operates through five segments: NAFTA; Europe; Brazil and Neighboring Countries (Brazil); Africa & Commonwealth of Independent States (ACIS); and Mining. The stock currently has a dividend yield of 1.6%. Currently there are 3 analysts that rate ArcelorMittal a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for ArcelorMittal has been 7.0 million shares per day over the past 30 days. ArcelorMittal has a market cap of $18.0 billion and is part of the basic materials sector and metals & mining industry. Shares are down 1.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ArcelorMittal as a hold. 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 notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • ARCELORMITTAL SA has improved earnings per share by 23.2% 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 two years. 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 -$0.61 versus -$1.46 in the prior year. This year, the market expects an improvement in earnings (-$0.11 versus -$0.61).
  • 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 22.2% when compared to the same quarter one year prior, going from -$1,227.00 million to -$955.00 million.
  • Despite the weak revenue results, MT has outperformed against the industry average of 18.4%. Since the same quarter one year prior, revenues slightly dropped by 5.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.47, 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 0.37 is very low and demonstrates very weak liquidity.
  • The gross profit margin for ARCELORMITTAL SA is currently extremely low, coming in at 8.28%. 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 -5.10% significantly underperformed when compared to the industry average.

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