Algoma Steel Group (ASTL) AI Stock Analysis

• Market Cap: $1.01B
• Dividend Yield: 2.9%
• Average Volume (3M): 510.35K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.28
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: CA
• Employees: 2,818
• Sector: Basic Materials
• Sector Strength: 67
• Industry: Steel
• EPS (TTM): -0.48
• Shares Outstanding: 104,933,800
• 10 Day Avg. Volume: 294,449
• 30 Day Avg. Volume: 510,352
• PEG Ratio: 0.16
• Price to Book (P/B): 0.66
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -2.58
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $10.67
• Price Target Upside: 10.92% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 57 Neutral
• Price Target: C$10.00 ▲(3.95%Upside)

Algoma Steel's overall stock score reflects significant financial challenges, with negative profitability and cash flow constraints weighing heavily. Technical analysis provides a moderate positive outlook due to upward momentum. However, the company's valuation is hindered by net losses. The ongoing EAF transition could offer strategic advantages, but financial improvements are critical for a more favorable stock assessment.

Positive Factors

Earnings

Algoma's 2Q'25 adjusted EBITDA guidance is better than feared, with figures exceeding consensus estimates.

Liquidity

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.

Transformation

The transformation from BoF-based steelmaking to EAF is expected to lead to higher profitability and lower costs over time.

Negative Factors

Market Cap

Despite Algoma's market cap being below replacement value, upside potential is limited due to tariff-related uncertainty and the EAF still in early stages of ramp-up.

Market Conditions

Reduced shipments to the U.S. market and a weak Canadian market contributed to lower than expected shipment volumes.

Tariffs

The doubling of Section 232 tariffs has created a challenging environment for Algoma, significantly impacting its earnings potential.

Algoma Steel Group Business Overview & Revenue Model

Company Description

Algoma Steel Group (ASTL) is a leading Canadian producer of hot and cold rolled steel products, primarily serving the automotive, construction, energy, and manufacturing sectors. Based in Sault Ste. Marie, Ontario, the company is known for its high-quality steel production, offering a range of products that include sheet, plate, and strip steel. With a focus on sustainable practices, Algoma Steel is committed to reducing its environmental footprint while providing top-tier steel solutions to its diverse clientele.

How the Company Makes Money

Algoma Steel Group generates revenue through the production and sale of steel products, catering to various industries such as automotive, construction, and energy. The company's revenue streams primarily consist of the sale of hot and cold rolled steel products, which are delivered to customers in Canada, the United States, and internationally. Algoma Steel benefits from its strategic location near key transportation routes, allowing for efficient distribution. Additionally, the company engages in partnerships and contracts with major industrial players, ensuring a steady demand for its steel products. Factors such as market demand, steel prices, and production efficiency significantly influence the company's earnings.

Algoma Steel Group Financial Statement Overview

Summary

Algoma Steel Group faces significant financial challenges with negative profitability metrics and declining revenue. The balance sheet is stable with manageable debt but requires improved profitability. 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.

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.

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.

Breakdown	Dec 2024	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	2.45B	2.80B	2.78B	3.81B	1.79B
Gross Profit	-162.40M	282.30M	389.80M	1.51B	157.20M
EBITDA	-72.80M	281.70M	489.30M	1.29B	171.90M
Net Income	-222.67M	105.20M	298.50M	857.70M	-76.10M
Balance Sheet
Total Assets	3.19B	2.68B	2.46B	2.69B	1.55B
Cash, Cash Equivalents and Short-Term Investments	267.00M	97.90M	247.40M	915.30M	21.20M
Total Debt	659.60M	146.10M	122.30M	96.20M	629.40M
Total Liabilities	1.68B	1.17B	993.40M	1.11B	1.38B
Stockholders Equity	1.51B	1.50B	1.46B	1.58B	173.80M
Cash Flow
Free Cash Flow	-362.70M	-195.50M	-156.20M	1.10B	-63.70M
Operating Cash Flow	-62.60M	294.60M	177.30M	1.26B	8.10M
Investing Cash Flow	-272.20M	-490.10M	-333.50M	-165.70M	-72.90M
Financing Cash Flow	483.70M	44.70M	-569.60M	-198.70M	-167.40M

Algoma Steel Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 9.62
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ASTL, the sentiment is Positive. The current price of 9.62 is above the 20-day moving average (MA) of 9.44, above the 50-day MA of 8.58, and below the 200-day MA of 10.75, indicating a neutral trend. The MACD of 0.25 indicates Positive momentum. The RSI at 59.99 is Neutral, neither overbought nor oversold. The STOCH value of 59.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ASTL.

Algoma Steel Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LIF	78 Outperform	C$1.75B	12.79	20.74%	8.21%	3.67%	-6.05%
VNP	71 Outperform	C$1.00B	32.88	15.41%	―	28.27%	36.49%
TKO	61 Neutral	C$1.39B	11.15	-12.40%	―	7.36%	-159.52%
ASTL	57 Neutral	$1.01B	―	-12.92%	2.90%	―	―
TSL	51 Neutral	C$64.47M	―	-3.69%	3.63%	-9.16%	-311.26%
Sector *	44 Neutral	AU$1.45B	-6.12	-40.74%	4.22%	-3.45%	-41.76%
ABRA	41 Neutral	C$864.95M	―	-67.76%	―	―	-16.69%

Algoma Steel Group Corporate Events

Algoma Steel Files Base Shelf Prospectus for Financial Flexibility

Algoma Steel Group Inc. has filed a base shelf prospectus with the Ontario Securities Commission and a corresponding registration statement with the U.S. SEC, allowing potential offerings of various securities over a 25-month period. This move is aimed at maintaining financial flexibility, although the company currently has no plans for a capital raise. The filings could facilitate the exercise of outstanding warrants and the resale of previously registered securities, impacting the company’s operational strategy and offering potential benefits to stakeholders.

The most recent analyst rating on (TSE:ASTL) stock is a Hold with a C$8.00 price target. To see the full list of analyst forecasts on Algoma Steel Group stock, see the TSE:ASTL Stock Forecast page.

Algoma Steel Reports Q1 2025 Loss Amid EAF Transition

Algoma Steel Group reported a net loss of $24.5 million for the first quarter of 2025, with consolidated revenue of $517.1 million, down from $620.6 million in the previous year. Despite challenges such as tariff uncertainty and subdued market demand, the company is advancing its transformative EAF project, expecting first steel production in Q2 2025. This shift is anticipated to enhance Algoma’s resilience and position it as a strategic player in the North American steel industry, with a focus on sustainability and long-term stakeholder value.

Algoma Steel to Release Q1 2025 Financial Results

Algoma Steel Group Inc. announced it will release its first quarter financial results for 2025 on April 29, with a webcast and conference call scheduled for April 30 to discuss the results and recent events. This announcement reflects Algoma’s ongoing commitment to transparency and engagement with stakeholders, as it continues its transformation journey towards becoming a leading producer of green steel in North America.