ArcelorMittal SA (ADR) (NYSE:MT) has been facing some headwinds in the market. The stock recently fell below its 52-week low and there are risks that the company may become worth $365.4 million. It should be noted here that the company is currently valued at $5.22 billion. As a result, investors are being cautious about the stock and are mostly looking to sell. MT management, however, is not oblivious to their situation and has made public its plan restructure the company and improve its cash flows. Since the plan is expected to last until 2020, investors are still unmoved with these developments.
Apart from its restructuring plans, ArcelorMittal is also planning to drastically reduce its debt. The company’s surging debt has been keeping investors away from the stock. Since the market for metals is experiencing a prolonged slowdown, MT would find it difficult to finance the debts, which are due to be mature over the next 3-years. However, the company is trying to become more efficient in iron ore operations and in its 4Q2015 MT indicated that it had brought the costs of its mining operations below $40 per metric ton.
Although most analysts believe that ArcelorMittal is not going to be profitable anytime soon, but a closer look reveals that the situation is improving. Unfortunately, that is not enough to convince the investors. The worst part about MT’s situation is that it is underperforming the S&P500 by 65.17%. Analysts, however, still remain optimistic about the stock and most analysts have awarded a hold rating to MT.
A better position of the company can be viewed through the conditions in the automotive industry. ArcelorMittal is the largest supplier of steel to the automotive sector. Unfortunately, the growth levels in that sector are slow as well. However, since the conditions are improving, there is still some hope for the company to bounce back, if it can stick to its 2020 Action plan.
ArcelorMittal SA (ADR) (NYSE:MT) closed at a share price of $3.32, after gaining 5.4% during the February 16 session.