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Algoma Steel Group (ASTL)
NASDAQ:ASTL
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Positive Factors
Cost Reduction and Margins
The transformation to EAF production will reduce overall costs and translate to improved through-cycle margins.
Liquidity and Support
Algoma currently has sufficient liquidity to complete its transformation to EAF production, with Canadian government also previously flagging willingness to aid companies impacted by the tariffs.
Negative Factors
Earnings Potential
Algoma ships nearly 60% of its sheet to the U.S., and the doubling of import tariffs to 50% has a significant impact on its earnings potential, especially with the Canadian market currently oversupplied.
Market Cap and Uncertainty
Although Algoma's market cap is below replacement value, the upside potential is currently limited due to tariff-related uncertainty and with EAF still in early stages of ramp-up.
Tariff Impact
The announcement that Section 232 steel tariffs will double to 50% has resulted in further deterioration of the near-term outlook for Algoma given its material exposure to the U.S. market.
Algoma Steel Group (ASTL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$615.90M
Dividend Yield3.35%
Average Volume (3M)857.32K
Price to Earnings (P/E)―
Beta (1Y)0.98
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees2,818
SectorBasic Materials
Sector Strength62
IndustrySteel
Share Statistics
EPS (TTM)-0.44
Shares Outstanding104,933,800
10 Day Avg. Volume964,684
30 Day Avg. Volume857,323
Financial Highlights & Ratios
PEG Ratio0.14
Price to Book (P/B)0.61
Price to Sales (P/S)0.00
P/FCF Ratio-4.81
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$7.07Price Target Upside20.24% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Algoma Steel Group Business Overview & Revenue Model
Company DescriptionAlgoma Steel Group Inc. produces and sells steel products primarily in North America. It provides flat/sheet steel products, including temper rolling, cold rolled, hot-rolled pickled and oiled products, floor plate, and cut-to-length products for the automotive industry, hollow structural product manufacturers, and the light manufacturing and transportation industries; and plate steel products that consist of rolled, hot-rolled, and heat-treated for use in the construction or manufacture of railcars, buildings, bridges, off-highway equipment, storage tanks, ships, and military applications. Algoma Steel Group Inc. was founded in 1901 and is headquartered in Sault Ste. Marie, Canada.
How the Company Makes Money
Algoma Steel Group Earnings Call Summary
Earnings Call Date:Mar 12, 2025
(Q3-2025)
| % Change Since: 2.62%|
Next Earnings Date:Jun 19, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a company facing significant market challenges and tariff-related uncertainties, but with strong liquidity and strategic advancements such as the nearing completion of the EAF project and opportunities arising from Canadian tariffs on US steel.Q3-2025 Updates
Positive Updates
Electric Arc Furnace (EAF) Project Nearing Completion
The EAF project is progressing as planned with first steel production expected in April 2025. The project is expected to be completed within 5% of the upper end of the budget range and marks a significant milestone for Algoma Steel.
Plate Shipments Increase
Plate shipments for Q4 2024 reached approximately 82,000 tons, up from 73,000 tons in Q3 2024, with expectations for further increases in Q1 2025.
Strong Liquidity Position
Algoma Steel maintains a strong balance sheet with over $267 million in cash and total liquidity of $630 million.
Canadian Tariffs on US Steel
The Canadian government announced tariffs on US steel, providing Algoma an opportunity to increase market share, particularly in plate production.
Negative Updates
Challenging Market Conditions and Tariff Uncertainty
Global steel markets faced challenges due to tariff uncertainty, US election impacts, and other factors, resulting in lower realized prices and a decline in revenues.
Decline in Steel Revenue and Adjusted EBITDA
Steel revenue for Q4 2024 was $536 million, down 3.8% from the prior year, with adjusted EBITDA showing a loss of $60.3 million.
Cost Increases and Lower Shipments
Cost per ton of steel products sold increased, and shipments for the full year 2024 were 2 million net tons, down from 2.1 million in the prior year.
Impact of Tariffs and Market Uncertainty
The implementation of tariffs on Canadian steel and aluminum imports has introduced uncertainty, impacting the order book and shipment expectations.
Company Guidance
In the recent conference call, Algoma Steel Group Inc. provided comprehensive guidance on their financial and operational metrics. The company reported a balance sheet with $267 million in cash and total liquidity of $630 million, positioning them well to complete their Electric Arc Furnace (EAF) project on schedule. For Q4 2024, Algoma shipped 549,000 tons, a 6.3% increase from the previous year, but faced a decline in net sales realization to $976 per ton. The adjusted EBITDA was a loss of $60.3 million, reflecting challenging market conditions that included tariff uncertainties and higher costs. For the full year 2024, the company achieved steel revenue of $2.2 billion with shipments of 2 million net tons. Looking ahead, Algoma expects Q1 2025 plate production to increase, leveraging its position as Canada's sole discrete plate producer, with an annual run rate capacity target of over 650,000 net tons. EAF project commissioning is progressing, with first steel production anticipated in April 2025. Despite market challenges, Algoma aims to optimize its product mix and enhance operational efficiencies through the EAF transition.Algoma Steel Group Financial Statement Overview
Summary
Algoma Steel Group faces significant financial challenges, with negative profitability metrics and declining revenue. The balance sheet remains relatively stable, with a manageable debt level, but profitability needs improvement. Cash flow constraints due to high capital expenditures pose risks to future growth.Income Statement
Algoma Steel Group's income statement reveals a challenging financial situation. The TTM (Trailing-Twelve-Months) gross profit margin is negative, indicating the cost of goods sold exceeds revenue. The net profit margin is also negative, highlighting the company's struggle to achieve profitability. Revenue has declined significantly from previous periods, showing a negative growth trajectory. Both EBIT and EBITDA margins are negative, reflecting operational inefficiencies. Despite these setbacks, the historical data shows the company was profitable in 2022, suggesting potential for recovery if operational issues are addressed.45
Neutral
Balance Sheet
The balance sheet of Algoma Steel Group presents a mixed picture. The debt-to-equity ratio is relatively moderate, suggesting a balanced approach to leveraging. However, the return on equity (ROE) is negative in TTM, showing a decline in profitability. The equity ratio remains stable, indicating solid capital structure. While the company has a considerable amount of total assets, the decline in cash reserves is a concern. Overall, the company maintains a stable equity base but needs to enhance profitability to improve ROE.60
Neutral
Cash Flow
Cash flow analysis for Algoma Steel Group shows some strengths and weaknesses. The TTM operating cash flow to net income ratio is positive, indicating operational cash generation despite net losses. However, free cash flow is negative, primarily due to high capital expenditures. This limits the company's ability to invest in growth opportunities without additional financing. Although the past cash flow was strong in 2022, recent trends highlight the need for more effective cash management to ensure sustainability.55
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.77B | 2.45B | 2.80B | 2.78B | 3.81B | 1.79B | Gross Profit |
| -139.30M | -162.40M | 282.30M | 389.80M | 1.51B | 157.20M | EBIT |
| -236.00M | -300.00M | 167.30M | 290.50M | 1.41B | 84.80M | EBITDA |
| -15.00M | -72.80M | 281.70M | 489.30M | 1.29B | 171.90M | Net Income Common Stockholders |
| -125.00M | -222.67M | 105.20M | 298.50M | 857.70M | -76.10M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 226.50M | 267.00M | 97.90M | 247.40M | 915.30M | 21.20M | Total Assets |
| 3.09B | 3.19B | 2.68B | 2.46B | 2.69B | 1.55B | Total Debt |
| 654.50M | 659.60M | 146.10M | 122.30M | 96.20M | 629.40M | Net Debt |
| 428.00M | 392.60M | 48.20M | -125.10M | -819.10M | 608.20M | Total Liabilities |
| 1.61B | 1.68B | 1.17B | 993.40M | 1.11B | 1.38B | Stockholders Equity |
| 1.48B | 1.51B | 1.50B | 1.46B | 1.58B | 173.80M |
| Cash Flow | Free Cash Flow | ||||
| -184.70M | -362.70M | -195.50M | -156.20M | 1.10B | -63.70M | Operating Cash Flow |
| 130.00M | -62.60M | 294.60M | 177.30M | 1.26B | 8.10M | Investing Cash Flow |
| -286.80M | -272.20M | -490.10M | -333.50M | -165.70M | -72.90M | Financing Cash Flow |
| 475.60M | 483.70M | 44.70M | -569.60M | -198.70M | -167.40M |
Algoma Steel Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| $615.90M | ― | -12.92% | 3.35% | ― | ― | ||
51 Neutral | $2.02B | -1.14 | -21.37% | 3.64% | 2.88% | -30.57% | |
| $967.40M | 10.75 | -12.40% | ― | ― | ― | ||
78 Outperform | C$1.86B | 13.57 | 20.74% | 10.49% | 3.67% | -6.05% | |
71 Outperform | C$796.93M | 26.21 | 15.41% | ― | 28.27% | 36.49% | |
52 Neutral | C$63.69M | ― | -3.69% | 4.29% | -9.16% | -311.26% | |
| $485.64M | ― | -67.76% | ― | ― | ― |
* Basic Materials Sector Average
Performance Comparison
ASTL
Algoma Steel Group
5.88
-1.29
-17.99%
TGB
Taseko Mines
3.06
0.61
24.90%
TSE:LIF
Labrador Iron Ore
29.07
2.90
11.08%
TSE:TSL
Tree Island Steel
2.50
-0.41
-14.09%
TSE:VNP
5N Plus
8.95
2.78
45.06%
ABBRF
AbraSilver Resource
3.20
1.55
93.94%
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.