Should Value Investors Buy ArcelorMittal (MT) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is ArcelorMittal (MT). MT is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 2.88, which compares to its industry's average of 4.24. MT's Forward P/E has been as high as 28.14 and as low as 2.81, with a median of 5.46, all within the past year.
Another valuation metric that we should highlight is MT's P/B ratio of 0.66. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.58. MT's P/B has been as high as 0.82 and as low as 0.33, with a median of 0.67, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MT has a P/S ratio of 0.48. This compares to its industry's average P/S of 0.5.
Finally, investors should note that MT has a P/CF ratio of 3.52. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.26. Over the past 52 weeks, MT's P/CF has been as high as 15.68 and as low as -12.35, with a median of 4.27.
Value investors will likely look at more than just these metrics, but the above data helps show that ArcelorMittal is likely undervalued currently. And when considering the strength of its earnings outlook, MT sticks out at as one of the market's strongest value stocks.
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