The rapid recovery of the steel industry following the pandemic-led slowdown has been driven primarily by high demand from China. The recovery has encouraged investors to buy steel stocks, as evidenced by VanEck Vectors Steel ETF’s (SLX) 15.5% gains over the past month versus SPDR S&P 500 ETF Trust’s (SPY) 0.6% loss.
The demand for steel is expected to increase in the coming months, with the economy’s reopening driving increased steel demand from major end-markets, such as automotive and construction. And President Biden’s proposed $2 trillion-plus infrastructure plan is expected to further boost the demand for steel. According to Market Research Future, the steel market is expected to hit a $963.6 billion valuation by 2027.
Headquartered in Pohang, South Korea, PKX manufactures and sells steel rolled products and plates internationally. It operates through four segments: Steel, Construction, Trading, and Others. The company offers hot and cold rolled steel, stainless steel, plates, wire rods, and silicon steel sheets, among others.
The company announced on March 31 that it will supply 26,000 tons of steel plates to the construction of commercial facilities built by Shinsegae Eng. & Construction Co., Ltd. PKX’s revenue climbed 11.9% year-over-year to 16.07 billion KRW ($14.21 million) for its fiscal first quarter, ended March 31. Its operating earnings grew 13.9% year-over-year to 1.55 billion KRW ($1.37 million). The company’s net earnings increased 161.8% year-over-year to 1.14 billion KRW ($1 million).
Analysts expect PKX’s EPS to increase 159.6% year-over-year to $8.49 in its fiscal year 2021. Its revenue is expected to increase 98.7% year-over-year to $58.89 billion in its fiscal year 2022. The stock has gained 149.2% over the past year to close yesterday’s trading session at $86.11.
PKX’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Momentum and Value, and a B grade for Stability and Sentiment. Within the A-rated Steel industry, PKX is ranked #13 of 34 stocks.
To see PKX’s ratings for Growth and Quality, click here.
Companhia Siderúrgica Nacional (SID)
Headquartered in Sao Paulo, Brazil, SID is an integrated steel producer in Brazil and Latin America. The company operates through five segments: Steel, Mining, Logistics, Energy, and Cement. Its offerings include flat steel products, hot and cold rolled products, galvanized products, tin mill products, channels, UPE sections, and steel sleepers.
SID’s net revenue increased 123% year-over-year to $11.91 billion for the first quarter, ended March 31. Its operating income grew 7404.8% year-over-year to $7.18 billion. SID’s net income came in at $5.70 billion in the first quarter compared to a $1.31 billion loss in the prior-year period.
For the quarter ending September 30, analysts expect SID’s EPS to be $0.74, which represents a 1,750% year-over-year increase. The company’s revenue is expected to increase 87.7% year-over-year to $10.38 billion in its fiscal year 2021. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has rallied 631.7% over the past year to close yesterday’s trading session at $9.
It’s no surprise that SID has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has an A grade for Momentum, Growth, Sentiment and Quality.
Click here to see SID’s ratings for Value and Stability as well. SID is ranked #3 in the same industry.
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PKX shares were trading at $85.82 per share on Friday afternoon, down $0.29 (-0.34%). Year-to-date, PKX has gained 37.73%, versus a 11.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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