ArcelorMittal (NYSE: MT) and Olympic Steel (NASDAQ:ZEUS) are both basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for ArcelorMittal and Olympic Steel, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ArcelorMittal 1 1 11 0 2.77
Olympic Steel 0 1 2 0 2.67

ArcelorMittal presently has a consensus target price of $31.90, indicating a potential upside of 16.65%. Olympic Steel has a consensus target price of $22.33, indicating a potential upside of 22.31%. Given Olympic Steel’s higher possible upside, analysts clearly believe Olympic Steel is more favorable than ArcelorMittal.

Institutional and Insider Ownership

3.6% of ArcelorMittal shares are held by institutional investors. Comparatively, 68.1% of Olympic Steel shares are held by institutional investors. 0.1% of ArcelorMittal shares are held by insiders. Comparatively, 18.3% of Olympic Steel shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares ArcelorMittal and Olympic Steel’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%
Olympic Steel 0.71% 2.82% 1.26%

Volatility & Risk

ArcelorMittal has a beta of 2.1, meaning that its stock price is 110% more volatile than the S&P 500. Comparatively, Olympic Steel has a beta of 1.72, meaning that its stock price is 72% more volatile than the S&P 500.

Earnings & Valuation

This table compares ArcelorMittal and Olympic Steel’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ArcelorMittal $61.98 billion 0.45 $7.47 billion $3.33 8.21
Olympic Steel $1.21 billion 0.17 $36.12 million $0.75 24.35

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

Dividends

Olympic Steel pays an annual dividend of $0.08 per share and has a dividend yield of 0.4%. ArcelorMittal does not pay a dividend. Olympic Steel pays out 10.7% of its earnings in the form of a dividend.

Summary

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

About ArcelorMittal

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).

About Olympic Steel

Olympic Steel, Inc. is a metals service center. The Company provides metals processing and distribution services for a range of customers. The Company operates through three segments: carbon flat products, specialty metals flat products, and tubular and pipe products. The Company’s carbon flat products segment’s focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. The Company’s specialty metals flat products segment’s focus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. The Company’s tubular and pipe products segment consists of the Chicago Tube and Iron Company (CTI) business. Through its tubular and pipe products segment, it distributes metals tubing, pipe, bar, valve and fittings, and fabricate pressure parts supplied to various industrial markets.

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