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POSCO (PKX)
NYSE:PKX
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POSCO
(NYSE:PKX)
74Outperform
POSCO (PKX) vs. S&P 500 (SPY)
Market Cap
$15.53B
Dividend Yield3.09%
Average Volume (3M)326.15K
Price to Earnings (P/E)19.8
Beta (1Y)1.12
Revenue Growth-9.67%
EPS Growth-37.38%
CountryUS
Employees44,501
SectorBasic Materials
Sector Strength65
IndustrySteel
Share Statistics
EPS (TTM)2.70
Shares Outstanding330,497,500
10 Day Avg. Volume351,522
30 Day Avg. Volume326,151
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.31
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$45.00Price Target Upside-18.66% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering0
POSCO Business Overview & Revenue Model
Company DescriptionPOSCO engages in the production of steel products. It operates through the following divisions: Steel, Engineering & Construction and Trading. The Steel division produces cold rolled, hot rolled and stain less steel products, plates, wire rods and silicon steel sheets. The Engineering & Construction division engages in the planning, designing and construction of industrial plants, civil engineering projects, commercial and residential buildings. The Trading division exports and imports steel products and raw materials. The company was founded on April 1, 1968 and is headquartered in Pohang, South Korea.
How the Company Makes MoneyPOSCO primarily generates revenue through the production and sale of steel products. Its core revenue streams include selling hot-rolled and cold-rolled steel, stainless steel, and other steel-related products to a diverse customer base across multiple industries, including automotive, construction, and shipbuilding. Additionally, the company benefits from its global operations and strategic partnerships, which enhance its distribution network and market reach. POSCO also invests in innovation and technology to improve efficiency and reduce production costs, contributing to its profitability.
POSCO Financial Statement Overview
Summary
POSCO's financial performance shows a strong balance sheet with manageable debt but struggles with declining revenue and negative free cash flow. The company has a solid capital structure but faces risks from negative revenue growth and liquidity pressures.Income Statement
The income statement shows a declining trend in revenue over the last year with a decrease from 84.75 trillion in 2022 to 77.06 trillion in 2023. The gross profit margin is approximately 8.2%, and the net profit margin is approximately 2.2% for 2023, indicating moderate profitability. Despite these margins, the revenue growth rate is negative, showing a decline in earnings. There are challenges in maintaining revenue growth and profitability.65
Positive
Balance Sheet
The balance sheet remains strong with a debt-to-equity ratio of approximately 0.48, indicating manageable leverage. The equity ratio is around 53.3%, which suggests a solid capital structure. Return on equity (ROE) is around 3.1%, which is relatively low, reflecting modest efficiency in generating profit from shareholders' equity. The company's stability is evident, but profitability is a concern.72
Positive
Cash Flow
Cash flow analysis reveals a negative free cash flow in 2023, indicating challenges in generating sufficient cash after capital expenditures. The operating cash flow to net income ratio is around 3.6, suggesting strong cash flow operations relative to net income. However, the free cash flow to net income ratio is negative, highlighting potential liquidity pressures. Cash flow management needs improvement.58
Neutral
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 74.23T | 77.06T | 84.75T | 76.33T | 57.79T | 64.37T | Gross Profit |
| 5.77T | 6.32T | 7.65T | 11.88T | 4.72T | 6.25T | EBIT |
| 2.58T | 3.60T | 4.85T | 9.24T | 4.97T | 3.87T | EBITDA |
| 6.95T | 7.26T | 8.53T | 13.41T | 6.23T | 7.34T | Net Income Common Stockholders |
| 1.35T | 1.70T | 3.16T | 6.61T | 1.58T | 1.84T |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 13.51T | 17.91T | 18.74T | 18.16T | 16.46T | 12.46T | Total Assets |
| 10.00T> | 10.00T> | 98.41T | 91.47T | 79.09T | 79.06T | Total Debt |
| 26.89T | 25.90T | 25.13T | 22.52T | 20.50T | 21.12T | Net Debt |
| 21.70T | 19.23T | 17.08T | 17.74T | 15.74T | 17.60T | Total Liabilities |
| 41.28T | 41.89T | 40.15T | 36.67T | 31.41T | 31.26T | Stockholders Equity |
| 54.18T | 54.15T | 52.51T | 50.43T | 44.33T | 44.47T |
| Cash Flow | Free Cash Flow | ||||
| -828.45B | -1.06T | 766.31B | 2.75T | 5.19T | 3.24T | Operating Cash Flow |
| 7.12T | 6.17T | 6.19T | 6.26T | 8.69T | 6.00T | Investing Cash Flow |
| -5.06T | -7.39T | -4.22T | -5.58T | -6.26T | -3.68T | Financing Cash Flow |
| -450.09B | -178.59B | 1.32T | -768.67B | -1.09T | -1.51T |
POSCO Technical Analysis
Neutral
55.32
Price Trends
46.54
Positive
48.76
Positive
57.30
Negative
Market Momentum
2.16
Negative
56.36
Neutral
64.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PKX, the sentiment is Neutral. The current price of 55.32 is above the 20-day moving average (MA) of 50.50, above the 50-day MA of 46.54, and below the 200-day MA of 57.30, indicating a neutral trend. The MACD of 2.16 indicates Negative momentum. The RSI at 56.36 is Neutral, neither overbought nor oversold. The STOCH value of 64.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PKX.
POSCO Risk Analysis
POSCO disclosed 29 risk factors in its most recent earnings report. POSCO reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
POSCO Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $15.53B | 19.82 | 2.06% | 3.09% | -9.67% | -37.38% | |
73 Outperform | $26.76B | 19.14 | 2.60% | 1.31% | -8.56% | 68.36% | |
72 Outperform | $19.08B | 12.91 | 17.27% | 1.45% | -6.68% | -32.96% | |
71 Outperform | $29.93B | 15.34 | 9.79% | 1.67% | -11.46% | -53.33% | |
49 Neutral | $9.39B | 26.68 | 3.43% | 0.49% | -13.48% | -56.94% | |
48 Neutral | $4.79B | ― | -10.36% | ― | -12.78% | -301.57% | |
47 Neutral | $2.68B | -3.93 | -26.14% | 3.26% | 2.31% | -28.79% |
* Basic Materials Sector Average
Performance Comparison
PKX
POSCO
51.93
-27.01
-34.22%
MT
ArcelorMittal
31.58
5.12
19.35%
CLF
Cleveland-Cliffs
9.42
-11.84
-55.69%
NUE
Nucor
122.01
-69.61
-36.33%
STLD
Steel Dynamics
122.67
-19.26
-13.57%
X
United States Steel
40.90
1.44
3.65%
POSCO Earnings Call Summary
Earnings Call Date: Feb 3, 2025 | % Change Since: 24.26% | Next Earnings Date: Apr 28, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with significant challenges in declining profits across major segments due to market conditions, while highlighting strategic expansions and restructuring efforts aimed at future growth.Highlights
Successful Completion of EV Battery Materials Plants
In Q4, POSCO successfully completed various EV battery materials plants, including POSCO Argentina and POSCO Lithium Solution, marking progress in the Energy Materials business.
Restructuring Efforts Generate Significant Cash
Through restructuring efforts, KRW662.5 billion cash was generated, with KRW100 billion allocated for buying back and retiring treasury shares.
Expansion in Energy Materials
Completion of Phase 1 brine lithium plant in Argentina by end of 2024 and significant contracts with SK ON and Future M, exceeding the capacity of Plant 1.
Continued Investment in Infrastructure
Investments in Australia and Myanmar to expand production capacity, including offshore gas field Phase 3 commercial production in Myanmar and Senex development project in Australia.
Lowlights
Decline in Consolidated Revenue and Operating Profit
Consolidated account revenue of KRW72.7 trillion and operating profit of KRW2.2 trillion both declined against the previous year.
Significant Losses in Energy Materials
Energy Materials business recorded KRW278 billion losses, with further deficit widening due to high initial costs at newly commissioned plants.
Q4 Operating Profit Drops Significantly
Q4 operating profit was particularly weak at KRW95 billion, affected by one-off cost increases in the steel business including labor costs.
Inventory Valuation and Asset Impairment Losses
KRW1.3 trillion in non-cash expenses, including asset impairment losses, were accounted for in Q4, with full-year asset impairment losses of KRW1.2 trillion.
Challenges in Steel Business
Operating profit in steel declined 35% Y-o-Y, with POSCO’s OP margin dropping by 3.9% and a 29% Y-o-Y decrease in profit.
Natural Gas and Oil Price Stabilization Impact
In Q4, the stabilization of natural gas and oil prices led to a drop in S&P, causing a significant Y-o-Y decline in profit for POSCO International.
Company Guidance
During the POSCO Holdings 2024 earnings call, guidance was provided on various business segments amid challenging market conditions. The company reported consolidated revenue of KRW72.7 trillion and an operating profit of KRW2.2 trillion, both declining from the previous year. The steel segment faced headwinds due to China's oversupply, resulting in a 35% year-over-year decline in operating profit and a 3.9% drop in the operating margin. Despite these challenges, the company maintained relatively stable profits in its value-added steel products and pursued overseas growth market investments and carbon neutrality efforts. The Energy Materials segment recorded KRW278 billion in losses, impacted by initial operation costs and inventory valuation losses, but saw progress with new battery materials plants reaching ramp-up stages. POSCO also focused on restructuring low-performing assets, generating KRW662.5 billion in cash, with plans to liquidate additional assets in 2025 to improve asset efficiency. The company highlighted plans to invest in lithium and cathode active materials production and infrastructure expansion in Australia and Myanmar to strengthen its energy business foundation. Despite adverse conditions, POSCO Holdings aims to sustain strong profits by focusing on enhancing facility capacity, acquiring quality lithium assets, and stabilizing operations to achieve medium-term profitability.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.