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ArcelorMittal Could Keep Outperforming US Steel Stocks

Mohit Oberoi, CFA - Author

Nov. 20 2020, Updated 1:39 p.m. ET


ArcelorMittal (MT), the world’s largest steel producer, outperformed its US-based peers including U.S. Steel Corporation (X) and AK Steel (AKS) last year. The stock has continued its good run in 2018 as well. Based on the closing prices on January 17, ArcelorMittal has gained 13.5% year-to-date. In this part, we’ll see how analysts rate ArcelorMittal.

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Analysts’ rating

ArcelorMittal (MT) has a “buy” or higher rating from 16 analysts. Two analysts have a “hold” rating on the stock, while the remaining two analysts polled by Thomson Reuters have a “sell” rating or some equivalent. The stock has received a mean consensus target price of $37.9, which represents 3.4% upside over its closing prices on January 17.

2018 drivers

Looking back at 2017, barring December, it was a somber year for US-based steel stocks (XME). Companies like U.S. Steel Corporation and Nucor (NUE) traded with losses for most of the year. However, ArcelorMittal showed strength for most of 2017. Last year, the US steel market sentiments were subdued after the spectacular rally in 2016. We saw a rise in US steel imports last year amid the pending Section 232 imports probe. A higher level of imports hampered US steel producers’ ability to hike steel prices.

If President Trump takes tough action against steel imports under the Section 232 investigation, it would benefit companies like AK Steel that get most of their revenues from US markets. On the other hand, NAFTA (North America Free Trade Agreement) accounts for only about a quarter of ArcelorMittal’s revenues. We could see US-based steel producers outperform their global peers if there’s tough action against imports by President Trump.

You can visit Market Realist’s Metals and Mining page for ongoing updates on this industry.


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