ZAYBXC schreef op 5 november 2015 14:04:
Shares at depressed levels can look like a buying opportunity, but investors would be better served to stay away.
ArcelorMittal (MT - Get Report) , one of the largest steel producers in the U.S., will report third-quarter earnings before the opening bell Friday. Shares at depressed levels can look like a buying opportunity, but investors would be better served to stay away.
The Luxembourg-based company, which enjoys some 7% of the world's steel production, pays a nice dividend that yields more than 3.00% annually -- one percentage point higher than the S&P 500 (SPX) index.
But dividends alone are not nearly enough to make up for the losses that investors have continued to suffer.
Weak commodity steel prices and lessening demand continue to hurt profits; in recent months, ArcelorMittal's shares have been punished severely, losing 50% of their value so far in 2015 and 55% over the past 12 months.
Although the company continues to make operational improvements, including cost-cutting to offset declining demand, it would be a mistake to place a long-term bet on ArcelorMittal's recovery. (((To date, management hasn't offered credible ways to grow revenue and profit margins.))) ( Waarom hebben ze dan in 2014 een toeleverancier aan de autoindustrie opgekocht? En sluiten ze verlies draaiende onderdelen... Dat doe je immers om je winstgevende onderdelen winstgevend te houden tem koste van idd dalende revenue in andere sectoren... ) ;-)
Friday's results are likely to reveal what investors have ignored for some time about the steel industry: Things can always get worse.
For the quarter that ended Sept. 30, the company is expected to post a per-share loss of (((7 cents))) (Het wordt al minder... We hadden al 11 cent verlies staan.), reversing earnings of 3 cents a share in the year-ago quarter. Revenue, meanwhile, is projected to decline 20% year over year to $16 billion, compared to the year-ago quarter when revenue exceeded $20 billion.
For all of 2015 the per-share loss is projected to climb to 51 cents. Full-year revenue of $67 billion would mark a year-over-year decline of 16%.
Like the rest of the metals & mining industry, which has declined some 30% in value in 2015 according to research firm Fidelity, ArcelorMittal is heading backward.
Even based on 2016 consensus earnings per share estimates of 23 cents, this still translates to a decline of more than 300% from 2014 levels of 75 cents a share. So where's the value?
Despite the adjustments that ArcelorMittal has made to combat steel prices, the pace of the company's improvement continues to trail the steel industry.
The bottom line: Betting on steel has been a foolish decision. Placing another wager now on one of the hardest-hit steel stocks would be throwing good money after bad.