Comparing Ternium (TX) & ArcelorMittal (MT)

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Ternium (NYSE:TX) and ArcelorMittal (NYSE:MT) are both basic materials companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, dividends, risk, profitability, analyst recommendations, earnings and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Ternium 13.17% 23.04% 12.43%
ArcelorMittal 6.77% 13.24% 6.42%

Valuation & Earnings

This table compares Ternium and ArcelorMittal’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ternium $11.45 billion 0.45 $1.51 billion $7.67 3.34
ArcelorMittal $76.03 billion 0.30 $5.15 billion $5.76 3.86

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

Institutional and Insider Ownership

3.1% of ArcelorMittal shares are held by institutional investors. 0.0% of Ternium shares are held by insiders. Comparatively, 0.1% of ArcelorMittal shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Ternium has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, ArcelorMittal has a beta of 2.05, indicating that its stock price is 105% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for Ternium and ArcelorMittal, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ternium 1 5 1 0 2.00
ArcelorMittal 0 4 5 0 2.56

Ternium presently has a consensus target price of $33.50, suggesting a potential upside of 30.60%. ArcelorMittal has a consensus target price of $30.29, suggesting a potential upside of 36.36%. Given ArcelorMittal’s stronger consensus rating and higher probable upside, analysts clearly believe ArcelorMittal is more favorable than Ternium.

Dividends

Ternium pays an annual dividend of $1.10 per share and has a dividend yield of 4.3%. ArcelorMittal pays an annual dividend of $0.09 per share and has a dividend yield of 0.4%. Ternium pays out 14.3% of its earnings in the form of a dividend. ArcelorMittal pays out 1.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Ternium has increased its dividend for 2 consecutive years. Ternium is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

ArcelorMittal beats Ternium on 10 of the 17 factors compared between the two stocks.

Ternium Company Profile

Ternium S.A., through its subsidiaries, manufactures and processes various steel products in Mexico, Argentina, Paraguay, Chile, Bolivia, Uruguay, Brazil, the United States, Colombia, Guatemala, Costa Rica, Honduras, El Salvador, and Nicaragua. It operates in two segments, Steel and Mining. The Steel segment offers steel products, including slabs, billets and round bars, hot rolled flat products, merchant bars, reinforcing bars, stirrups and rods, tin plate and galvanized products, tubes, beams, insulated panels, roofing and cladding, roof tiles, steel decks, pre-engineered metal building systems, and pig iron; and sells energy. The Mining segment sells iron ore and pellets. The company also provides medical and social, and financial services. It serves various companies and small businesses operating in the automotive, home appliance, construction, capital goods, container, food, and energy, as well as heat, ventilation, and air conditioning industries. Ternium S.A. was founded in 1961 and is based in Luxembourg City, Luxembourg. Ternium S.A. is a subsidiary of Techint Holdings S.à r.l.

ArcelorMittal Company Profile

ArcelorMittal, together with its subsidiaries, owns and operates steel manufacturing and mining facilities in Europe, North and South America, Asia, and Africa. It operates through five segments: NAFTA, Brazil, Europe, ACIS, and Mining. The company produces finished and semi-finished steel products with various specifications. Its principal steel products include semi-finished flat products; finished flat products comprising plates, hot- and cold-rolled coils and sheets, hot-dipped and electro-galvanized coils and sheets, and tinplate and color coated coils and sheets; semi-finished long products, such as blooms and billets; finished long products, including bars, wire-rods, structural sections, rails, sheet piles, and wire-products; and seamless and welded pipes and tubes. The company's principal mining products comprise iron ore lumps, fines, concentrates, pellets, and sinter feeds; and coking and thermal coal, and pulverized coal injections. It provides its steel products to the automotive, appliance, engineering, construction, energy, and machinery industries. The company sells its products through a centralized marketing organization to customers in approximately 160 countries, as well as distributors and processors. It has iron ore mining activities in Brazil, Bosnia, Canada, Kazakhstan, Liberia, Mexico, Ukraine, and the United States; and coal mining activities in Kazakhstan and the United States. The company was founded in 1976 and is headquartered in Luxembourg City, Luxembourg.

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