Financial Review: ArcelorMittal (MT) & POSCO (PKX)

ArcelorMittal (NYSE: MT) and POSCO (NYSE:PKX) are both large-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.

Risk & Volatility

ArcelorMittal has a beta of 2.1, meaning that its share price is 110% more volatile than the S&P 500. Comparatively, POSCO has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500.

Dividends

POSCO pays an annual dividend of $0.55 per share and has a dividend yield of 0.8%. ArcelorMittal does not pay a dividend. POSCO pays out 9.9% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares ArcelorMittal and POSCO’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ArcelorMittal $61.98 billion 0.44 $7.47 billion $3.33 8.06
POSCO $51.60 billion 0.44 $6.26 billion $5.58 12.79

ArcelorMittal has higher revenue and earnings than POSCO. ArcelorMittal is trading at a lower price-to-earnings ratio than POSCO, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and target prices for ArcelorMittal and POSCO, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ArcelorMittal 1 1 11 0 2.77
POSCO 0 2 3 0 2.60

ArcelorMittal currently has a consensus target price of $31.90, suggesting a potential upside of 18.82%. Given ArcelorMittal’s stronger consensus rating and higher probable upside, research analysts plainly believe ArcelorMittal is more favorable than POSCO.

Institutional and Insider Ownership

3.6% of ArcelorMittal shares are held by institutional investors. Comparatively, 5.1% of POSCO shares are held by institutional investors. 0.1% of ArcelorMittal shares are held by company insiders. Comparatively, 0.0% of POSCO shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares ArcelorMittal and POSCO’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ArcelorMittal 5.50% 10.52% 4.58%
POSCO 3.60% 4.41% 2.78%

Summary

ArcelorMittal beats POSCO on 11 of the 16 factors compared between the two stocks.

ArcelorMittal Company Profile

ArcelorMittal S.A. (ArcelorMittal) is a holding company. The Company, together with its subsidiaries, owns and operates steel manufacturing and mining facilities in Europe, North and South America, Asia and Africa. ArcelorMittal operates through five segments, which include NAFTA; Europe; Brazil; Africa and Commonwealth of Independent States (ACIS), and Mining. The NAFTA segment produces flat, long and tubular products. The Brazil segment includes the flat operations of Brazil, and the long and tubular operations of Brazil and neighboring countries. The Europe segment is the flat steel producer in Europe. The ACIS segment produces a combination of flat, long products and tubular products. The Mining segment comprises all mines owned by ArcelorMittal in the Americas, Asia, Europe and Africa. It produces a range of finished and semi-finished steel products (semis).

POSCO Company Profile

POSCO is a Korea-based company principally engaged in the manufacture and distribution of steel products. The Company operates in four segments: steel, trading, construction, and others. The steel segment includes production of steel products and sale of such products. The trading segment consists of global trading activities of POSCO Daewoo Corporation, exporting and importing a range of steel products that are both obtained from and supplied to it, as well as between other suppliers and purchasers in Korea and overseas. The construction segment includes planning, designing and construction of industrial plants, civil engineering projects, and commercial and residential buildings, both in Korea and overseas. The others segment includes power generation, liquefied natural gas (LNG) logistics, and network and system integration.

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