On Friday, Citi reiterated its Buy rating on shares of Arcelor Mittal (NYSE:MT), with a positive outlook on the company's upcoming first-quarter earnings report.
The report, scheduled for May 2, 2024, will include headline EBITDA figures that factor in the share of net income for the first time. This change is expected to provide the market with a clearer view of the value of Arcelor Mittal's joint ventures (JVs) and the growth potential within them.
In addition to the EBITDA figures, the steel manufacturing giant will also report on its new 'sustainable solutions' segment separately. This segment is anticipated to possibly attract a higher valuation multiple than the group currently has. The analyst from Citi believes that this could serve as a catalyst for the market to better appreciate the company's ventures and the new segment.
The outlook for steel prices in Europe is also a point of optimism. According to Citi, steel prices have reached their lowest point and are expected to recover. However, the financial impact of the price recovery may take a quarter to reflect in the company's financials. Despite this lag, stocks often react in advance to changes in physical steel prices and earnings projections.
Citi's projections for Arcelor Mittal's performance are bullish, with expectations set at 3% above the consensus for the first quarter of 2024 and 13% above the consensus for the full year. These figures indicate a confidence in the company's near-term financial growth and its ability to outperform market expectations.
InvestingPro Insights
As Arcelor Mittal (NYSE:MT) gears up for its first-quarter earnings report, a closer look at some key metrics from InvestingPro can provide investors with additional context. The company's market capitalization stands at a robust $20.67 billion, reflecting its significant presence in the industry. Furthermore, the company's Price to Book ratio, as of the last twelve months leading up to Q4 2023, is at an attractive 0.38, suggesting that the stock might be undervalued compared to its book value.
InvestingPro Tips highlight that Arcelor Mittal has been actively engaged in share buybacks, which can be a signal of management's confidence in the company's value. Additionally, with a history of raising its dividend for three consecutive years and a current dividend yield of 1.69%, the company demonstrates a commitment to returning value to shareholders. For those looking to delve deeper, InvestingPro offers more insights, including additional tips for Arcelor Mittal, which investors can access using the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
Investors should also note that analysts predict the company will be profitable this year, with a net income expected to grow. These elements, coupled with Citi's optimistic outlook, suggest that Arcelor Mittal could be well-positioned for the upcoming earnings report and beyond. For those interested in a comprehensive analysis, there are over 10 additional InvestingPro Tips available for Arcelor Mittal, which could further inform investment decisions.
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