- Favorable/Negative Catalysts for the Stock
(Continuing from previous article: ArcelorMittal Stock Analysis – Is MT a Buy or Sell?)
The recent green shoots appearing in the U.S economy, and the "not so hard landing" seen in China, bodes well for MT's profitability in the next few quarters. These signals, if they continue to prevail and accelerate, could prove to be a positive catalyst for the company's 2013 growth projections.
MT's growth by acquisition strategy has so far been accretive to shareholders. However, the possible acquisition of ThyssenKrupp's loss-making Alabama project may mean that MT would either need to take on additional debt, issue more equity, or sell off lucrative assets (like the Canadian property it recently sold) to invest in a loss-producing operation. Should this acquisition go through, and not prove successful in creating shareholder value, the company could face a mass exodus of shareholders.
The more than 30% increase in Iron Ore prices since late Dec 2012 is a definite positive catalyst for the company's profitability. However, any indication that expected growth in China is slowing significantly, that the European crises is worsening, or that other sales regions like India are cutting back on industrial projects, would make it extremely difficult for MT to meet its 2013 guidance.
- Bottom Line Conclusion
Based on the various fundamental, technical and valuation analysis we’ve conducted on ArcelorMittal (MT), we do not see the stock as a strong buy or sell at this time. As such, we rate the stock a HOLD.
Analysts covering the stock have a Mean Target of $20.03, varying from a Low of $16.00 to a High of $27.30. Of the 6 Brokers/Analysts providing an opinion on the stock, 1 has a Strong Buy, 2 have a Buy, while 3 maintains a Hold recommendation.
Good luck in your investing. Let us know if you have any questions, comments or feedback,
MarketConsensus Stock Analysis Team
(By: Monty R. – MarketConsensus News Contributor)