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Algoma Steel Group (TSE:ASTL)
TSX:ASTL
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Algoma Steel Group
(TSX:ASTL)
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Rating:51Neutral
Price Target:
C$6.00
▲(19.05% Upside)
Action:ReiteratedDate:12/20/25
Algoma Steel Group's overall stock score reflects significant financial challenges, including declining revenues and negative profit margins. While technical indicators show some bullish momentum, valuation concerns persist with a negative P/E ratio. The earnings call provided a balanced view with both challenges and positive developments, such as strong liquidity and progress on strategic projects.
Positive Factors
Strong Liquidity Position
A strong liquidity position provides Algoma Steel with the financial flexibility to navigate market challenges and invest in strategic projects, supporting long-term stability.
Progress on Electric Arc Furnace Project
The EAF project signifies a strategic shift towards more efficient and sustainable steel production, potentially reducing costs and enhancing competitive positioning.
Expected Cost Reduction from EAF Transition
Cost reductions from the EAF transition can improve margins and profitability, enhancing Algoma's long-term financial health and competitive edge.
Negative Factors
Decline in Steel Revenue
Declining steel revenue indicates potential market share loss or pricing pressures, which could impact Algoma's ability to sustain growth and profitability.
Adjusted EBITDA Loss
An EBITDA loss reflects operational inefficiencies or cost pressures, signaling challenges in maintaining profitability and requiring strategic adjustments.
Weak Market Demand and Tariff Uncertainty
Ongoing market demand weakness and tariff uncertainties pose risks to revenue stability and growth, necessitating strategic responses to mitigate impacts.
Algoma Steel Group (ASTL) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$528.87M
Dividend Yield4.87%
Average Volume (3M)1.10M
Price to Earnings (P/E)―
Beta (1Y)1.75
Revenue GrowthN/A
EPS GrowthN/A
CountryCA
Employees2,818
SectorBasic Materials
Sector Strength58
IndustrySteel
Share Statistics
EPS (TTM)-3.36
Shares Outstanding104,933,800
10 Day Avg. Volume1,435,079
30 Day Avg. Volume1,099,421
Financial Highlights & Ratios
PEG Ratio-0.19
Price to Book (P/B)0.85
Price to Sales (P/S)0.45
P/FCF Ratio-6.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$7.38Price Target Upside46.33% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)-2.42
Revenue Forecast (FY)C$1.60B
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 MoneyAlgoma Steel generates revenue primarily through the sale of its steel products, which are sold to various industries including automotive, construction, and energy. The company operates on a business model that includes both direct sales to large manufacturers and distribution through third-party channels. Key revenue streams include the production of flat-rolled steel products, as well as value-added services such as steel processing and finishing. Algoma Steel may also engage in long-term contracts with major clients, ensuring stable revenue. Additionally, partnerships with industry players and participation in government contracts for infrastructure projects can further enhance earnings potential.
Algoma Steel Group Earnings Call Summary
Earnings Call Date:Mar 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Neutral
The call presented a balanced picture: the company faces large, structural headwinds from a 50% U.S. tariff that materially depressed volumes, margins, and resulted in significant adjusted EBITDA losses and workforce reductions. Offsetting these negatives are meaningful strategic actions — a successful EAF ramp underway, substantial government-backed liquidity, a differentiated plate market position, a material MOU with Hanwha Ocean, and meaningful working capital improvements that eased near-term cash burn. While the transformation and strategic repositioning create a credible path to stability and long-term value, the magnitude of the financial losses and market disruption means challenges remain in the near term.Q4-2025 Updates
Positive Updates
EAF Ramp-Up and Operational Progress
First electric-arc furnace (EAF) is running on a full 24-hour schedule with stable metallurgical quality and process control across plate and hot-rolled coil grades; second EAF remains on schedule. Cumulative project investment was C$920,000,000 as of 12/31/2025 with expected final aggregate cost of ~C$987,000,000 (implying ~C$67,000,000 remaining).
Strategic Pivot to Canadian Market and Plate Advantage
Company has exited primary blast furnace and coke oven operations and is pivoting to the Canadian market, focusing on high-value plate and selected coil products. Algoma is Canada's only producer of discrete plate, with plate demand across infrastructure, construction, and defense described as healthy and expected to increase sequentially into 2026.
Government-Backed Liquidity and Balance Sheet Availability
Secured C$500,000,000 in government-backed liquidity support plus an ABL facility. End-of-quarter liquidity position included C$77,000,000 cash, C$195,000,000 available under revolving credit, and C$417,000,000 available under the large enterprise tariff loan facility, providing runway for transformation.
Commercial Partnership Opportunity (Hanwha MOU)
Announced binding MOU with Hanwha Ocean (Jan 2026) with aggregate potential value of US$250,000,000, including US$200,000,000 toward a potential structural steel beam mill and up to US$50,000,000 in anticipated product purchases tied to the Canadian Patrol Submarine Program — a material signal of defense/shipbuilding demand.
Working Capital and Inventory Reduction Driving Cash Relief
Inventories declined to C$569,000,000 at fiscal year end from C$790,000,000 at the end of Q3 (Q4 reduction of ~C$221,000,000) and from C$879,000,000 in 2024 (year reduction of ~C$310,000,000), contributing to cash used in operations of C$3,000,000 in Q4 versus C$77,000,000 a year earlier.
Product Mix and Pricing Improvements in Value-Add
Net sales realizations improved in Q4 to C$1,077/ton (from C$976/ton prior-year quarter) driven by a higher proportion of value-added products, and plate prices are holding up materially better than sheet/HRC.
2026 Shipments Guidance and Mix
Management expects 2026 total shipments of 1.0–1.2 million tonnes with an anticipated mix roughly 50/50 plate and sheet as EAF capacity ramps through the year.
Negative Updates
Severe Tariff Impact and Structural Market Disruption
The 50% US Section 232 tariff fundamentally closed the U.S. market and created domestic oversupply; company absorbed C$225,000,000 in direct tariff cost for the full year, and Canadian transactional prices have traded up to ~40% below comparable U.S. levels across many categories.
Significant Adjusted EBITDA Losses
Q4 adjusted EBITDA was a loss of C$95,200,000 (adjusted EBITDA margin -20.9%). Full-year 2025 adjusted EBITDA was a loss of C$261,400,000 (margin -12.5%) versus an adjusted EBITDA gain of C$22,400,000 (0.9% margin) in 2024 — a year-over-year swing of ~C$283,800,000.
Sharp Decline in Shipments and Revenue
Q4 shipments were 378,000 net tons, down 31% versus prior-year quarter; full-year shipments were 1,700,000 tonnes versus 2,000,000 in 2024 (down 15%). Steel revenue in Q4 was C$408,000,000, down 23.9% YoY; full-year steel revenue was C$1,900,000,000 versus C$2,200,000,000 in 2024 (down ~13.6%).
Rising Cost per Ton and Fixed Cost Absorption Pressure
Cost per ton of steel products sold averaged C$1,332/ton in Q4 versus C$1,032/ton prior-year (an increase of ~29.1%), driven primarily by tariff costs, accelerated depreciation of BF/BOS assets and worse fixed cost absorption. Full-year cost per ton rose to C$1,216 from C$1,054 in 2024 (+~15.4%).
Negative Operating Cash Flow for the Year and Litigation Exposure
Cash flow used in operating activities for 2025 was C$66,000,000 versus cash generated of C$82,000,000 in 2024. Management also flagged pending litigation with U.S. Steel (Ontario) and arbitration in the U.S. regarding an iron ore supply agreement.
Workforce Impact — Layoffs
Approximately 1,000 employees received layoff notices due to the accelerated wind-down of blast furnace and coke oven operations, with attendant human and social impacts despite mitigation efforts with unions and government resources.
Sheet/HRC Pricing Severely Depressed
Hot-rolled coil/sheet pricing faced deep weakness (management noted sheet pricing ~40% lower versus prior indices), contributing to overall revenue pressure even as plate remained relatively stronger.
Near-Term Shipment Headwinds Expected
Due to persistently weak market demand, management expects Q1 2026 shipments to be sequentially lower than Q4 2025, indicating near-term volume pressure despite guidance for a full-year ramp.
Company Guidance
Guidance highlighted a 2026 shipment target of roughly 1.0–1.2 million tonnes (with Q1 sequentially lower than Q4’s 378k tonnes) and a mix of about 50/50 plate and sheet, with plate production expected to rise sequentially through 2026; EAF ramp-up is on track (first EAF 24/7, second on schedule) with cumulative project spend of C$920 million as of 12/31/2025 and an expected final aggregate cost of ~C$987 million; liquidity headroom includes C$500 million of government-backed support, C$195 million available under the ABL and C$417 million available under the tariff loan facility; the company expects Q1 2026 pricing and cost improvement to produce adjusted EBITDA directionally better than Q4 2025 (Q4 adjusted EBITDA loss C$95.2M, margin -20.9%; FY 2025 adjusted EBITDA loss C$261.4M, margin -12.5%), while sustaining CapEx is expected to step down toward ~C$80M/year and continued working-capital/inventory reductions (inventories C$569M at year-end) should aid cash flow; additionally, strategic optionality includes a US$250M Hanwha MOU (US$200M potential capex contribution and up to US$50M of product purchases).Algoma Steel Group Financial Statement Overview
Summary
Algoma Steel Group faces considerable financial challenges, with declining revenues, negative profit margins, and cash flow issues. The balance sheet remains relatively stable, but profitability and cash generation need significant improvement. Strategic initiatives to enhance operational efficiency and revenue growth are crucial for future stability and success.Income Statement
Algoma Steel Group's income statement shows significant challenges, with negative profit margins across the board in the TTM period. The gross profit margin is deeply negative, indicating cost pressures or inefficiencies. Revenue has declined, showing a negative growth rate, which is concerning for future prospects. The company needs to address these issues to improve profitability and revenue growth.35
Negative
Balance Sheet
The balance sheet reflects a moderate financial position. The debt-to-equity ratio has increased over time, indicating rising leverage, but it remains within a manageable range. Return on equity is negative, reflecting recent losses, but the equity ratio is stable, suggesting a decent capital structure. The company must focus on improving profitability to enhance its balance sheet strength.50
Neutral
Cash Flow
Cash flow analysis reveals significant challenges, with negative operating and free cash flows in the TTM period. Although there was some improvement in free cash flow growth, the operating cash flow to net income ratio is negative, indicating cash flow issues. The company needs to enhance cash generation to support operations and reduce financial strain.40
Negative
| Breakdown | TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.09B | 2.45B | 2.80B | 2.78B | 3.81B | 1.79B |
| Gross Profit | -665.00M | -162.40M | 282.30M | 389.80M | 1.51B | 157.20M |
| EBITDA | -814.70M | -72.80M | 278.40M | 489.30M | 1.29B | 79.60M |
| Net Income | -984.90M | -222.67M | 105.20M | 298.50M | 857.70M | -76.10M |
Balance Sheet | ||||||
| Total Assets | 2.12B | 3.19B | 2.68B | 2.46B | 2.69B | 1.55B |
| Cash, Cash Equivalents and Short-Term Investments | 77.60M | 267.00M | 97.90M | 247.40M | 915.30M | 21.20M |
| Total Debt | 916.90M | 659.60M | 146.10M | 122.30M | 96.20M | 629.40M |
| Total Liabilities | 0.00 | 1.68B | 1.17B | 993.40M | 1.11B | 1.38B |
| Stockholders Equity | 491.10M | 1.51B | 1.50B | 1.46B | 1.58B | 173.80M |
Cash Flow | ||||||
| Free Cash Flow | -361.20M | -362.70M | -195.50M | -156.20M | 1.10B | -63.70M |
| Operating Cash Flow | -63.10M | -62.60M | 294.60M | 177.30M | 1.26B | 8.10M |
| Investing Cash Flow | -282.61M | -272.20M | -490.10M | -333.50M | -165.70M | -72.90M |
| Financing Cash Flow | 93.42M | 483.70M | 44.70M | -569.60M | -198.70M | -167.40M |
Algoma Steel Group Technical Analysis
Negative
5.04
Price Trends
6.12
Negative
5.89
Negative
6.61
Negative
Market Momentum
-0.14
Positive
33.29
Neutral
16.33
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ASTL, the sentiment is Negative. The current price of 5.04 is below the 20-day moving average (MA) of 6.22, below the 50-day MA of 6.12, and below the 200-day MA of 6.61, indicating a bearish trend. The MACD of -0.14 indicates Positive momentum. The RSI at 33.29 is Neutral, neither overbought nor oversold. The STOCH value of 16.33 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ASTL.
Algoma Steel Group Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | C$1.82B | 19.01 | 16.92% | 6.37% | -10.99% | -43.30% | |
66 Neutral | C$310.43M | 5.90 | 14.25% | 7.35% | -28.86% | -48.20% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
54 Neutral | C$67.61M | -7.94 | -4.54% | 2.63% | -16.85% | -117.65% | |
51 Neutral | C$528.87M | -0.28 | -59.32% | 4.87% | ― | ― | |
50 Neutral | C$1.10B | 108.72 | -1.58% | 2.55% | 8.04% | -195.66% | |
47 Neutral | $573.46M | -1.37 | -25.24% | ― | -3.63% | 31.61% |
* Basic Materials Sector Average
TSE:ASTL
Algoma Steel Group
5.04
-3.82
-43.10%
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Algoma Steel Group Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Algoma Steel Secures $500 Million Government Financing for EAF Transition
Positive
Nov 21, 2025
Algoma Steel Group Inc. has completed a $500 million financing transaction with the Governments of Canada and Ontario, aimed at strengthening its balance sheet and providing financial flexibility for its Electric Arc Furnace (EAF) transition. This financing, which includes contributions from the Canada Enterprise Emergency Funding Corporation and the Province of Ontario, underscores the alignment between government and industry to support a resilient and competitive Canadian steel sector. The funding will enable Algoma to focus on operational efficiency and its plate-first commercial strategy, while supporting its transformation into a leading producer of green steel.
The most recent analyst rating on (TSE:ASTL) stock is a Hold with a C$5.00 price target. To see the full list of analyst forecasts on Algoma Steel Group stock, see the TSE:ASTL Stock Forecast page.
Business Operations and StrategyExecutive/Board Changes
Algoma Steel Announces Leadership Transition with New CEO and CFO Appointments
Positive
Oct 29, 2025
Algoma Steel Group Inc. has announced a leadership transition as part of its succession planning. Current CFO Rajat Marwah will succeed Michael Garcia as CEO effective January 1, 2026, while Michael Moraca will be promoted to CFO. This transition comes at a pivotal time for Algoma, which has recently secured liquidity support from federal and provincial governments and begun producing steel at its Electric Arc Furnace. The leadership change is expected to ensure stability and continuity as the company continues its transformation into a low-carbon steel producer.
The most recent analyst rating on (TSE:ASTL) stock is a Hold with a C$6.00 price target. To see the full list of analyst forecasts on Algoma Steel Group stock, see the TSE:ASTL Stock Forecast page.
Business Operations and StrategyFinancial Disclosures
Algoma Steel Group Faces Challenges Amidst Strategic Transition
Negative
Oct 29, 2025
Algoma Steel Group reported its third-quarter 2025 financial results, highlighting a significant net loss of $485.1 million, primarily due to a non-cash impairment loss and trade-related challenges, including U.S. tariffs. Despite these challenges, Algoma is advancing its transition to electric arc furnace technology, supported by $500 million in government liquidity, to strengthen its financial position and pursue sustainable profitability.
The most recent analyst rating on (TSE:ASTL) stock is a Hold with a C$6.00 price target. To see the full list of analyst forecasts on Algoma Steel Group stock, see the TSE:ASTL Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.