Analyzing Salzgitter (OTCMKTS:SZGPY) & ArcelorMittal (NYSE:MT)

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

Analyst Ratings

This is a summary of recent ratings and price targets for ArcelorMittal and Salzgitter, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ArcelorMittal	0	7	3	0	2.30
Salzgitter	2	2	2	1	2.29

ArcelorMittal presently has a consensus target price of $38.98, suggesting a potential downside of 8.93%. Given ArcelorMittal’s stronger consensus rating and higher possible upside, equities analysts clearly believe ArcelorMittal is more favorable than Salzgitter.

Risk & Volatility

ArcelorMittal has a beta of 1.72, suggesting that its share price is 72% more volatile than the S&P 500. Comparatively, Salzgitter has a beta of 1.5, suggesting that its share price is 50% more volatile than the S&P 500.

Institutional and Insider Ownership

9.3% of ArcelorMittal shares are owned by institutional investors. 0.1% of ArcelorMittal shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

ArcelorMittal pays an annual dividend of $0.46 per share and has a dividend yield of 1.1%. Salzgitter pays an annual dividend of $0.01 per share and has a dividend yield of 0.2%. ArcelorMittal pays out 13.7% of its earnings in the form of a dividend. Salzgitter pays out -2.5% 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ArcelorMittal	4.11%	4.99%	2.90%
Salzgitter	-4.45%	-9.40%	-4.03%

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ArcelorMittal	$61.10 billion	0.57	$1.34 billion	$3.36	12.74
Salzgitter	$10.83 billion	0.21	-$381.12 million	($0.40)	-10.51

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

Summary

ArcelorMittal beats Salzgitter on 15 of the 17 factors compared between the two stocks.

About ArcelorMittal

ArcelorMittal S.A., together with its subsidiaries, operates as integrated steel and mining companies in the United States, Europe, and internationally. It offers semi-finished flat products, including slabs; finished flat products comprising plates, hot- and cold-rolled coils and sheets, hot-dipped and electro-galvanized coils and sheets, tinplate, and color coated coils and sheets; semi-finished long products, such as blooms and billets; finished long products consisting of bars, wire-rods, structural sections, rails, sheet piles, and wire-products; and seamless and welded pipes and tubes. The company also provides mining products, such as iron ore lumps, fines, concentrates, pellets, and sinter feeds; and coking coal. It sells its products to various customers in the automotive, appliance, engineering, construction, energy, and machinery industries through a centralized marketing organization, as well as distributors. The company has iron ore mining activities in Brazil, Bosnia, Canada, Liberia, Mexico, South Africa, and Ukraine. ArcelorMittal S.A. was founded in 1976 and is headquartered in Luxembourg City, Luxembourg.

About Salzgitter

Salzgitter AG, together with its subsidiaries, engages in steel and technology businesses worldwide. It operates through four segments: Steel Production, Steel Processing, Trading, and Technology. The Steel Production segment manufactures steel and special steels, such as hot-rolled wide strip, steel sheet, sections, tailored blanks, as well as scrap trading. The Steel Processing segment produces various high-grade heavy plates; and manufactures line pipes, HFI-welded tubes, and precision and stainless-steel tubes. The Trading segment operates a European sales network, as well as trading companies and agencies worldwide. The Technology segment engages in the provision of machinery and plants for the filling and packaging of beverages, as well as special machinery engineering for shoe manufacturing and elastomer production. The company also provides IT, facility management, logistics, automotive engineering, and research and development services, as well as supplies raw materials. The company was founded in 1858 and is headquartered in Salzgitter, Germany.