Algoma Steel Group (ASTL) AI Stock Analysis

• Market Cap: $958.05M
• Dividend Yield: 3.05%
• Average Volume (3M): 461.67K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.21
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: CA
• Employees: 2,818
• Sector: Basic Materials
• Sector Strength: 63
• Industry: Steel
• EPS (TTM): -0.48
• Shares Outstanding: 104,933,800
• 10 Day Avg. Volume: 690,879
• 30 Day Avg. Volume: 461,672
• PEG Ratio: -0.08
• Price to Book (P/B): 0.92
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -8.60
• 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: $9.67
• Price Target Upside: 5.86% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 54 Neutral
• Price Target: C$9.00 ▼(-1.42%Downside)

Algoma Steel Group's overall stock score is driven by financial challenges and valuation concerns. However, positive technical indicators and strategic advancements, such as the EAF project nearing completion, provide some optimism. Earnings call insights suggest potential for operational improvements despite market challenges.

Positive Factors

Cost Reduction

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 Upside

Although Algoma's market cap is below replacement value, the upside potential is currently limited due to the 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 Business Overview & Revenue Model

Company Description

Algoma 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 generates revenue through the production and sale of steel products, primarily hot and cold rolled steel sheets and plates. The company's key revenue streams include direct sales to major industries such as automotive, construction, and energy, where steel is a critical component. Algoma Steel capitalizes on long-term contracts and relationships with key clients, which provide a stable income source. Additionally, the company benefits from fluctuations in steel prices, which can positively impact its earnings. Algoma Steel's strategic investments in sustainable and efficient production technologies also help reduce operational costs, further contributing to its profitability.

Algoma Steel Group Financial Statement Overview

Summary

Algoma Steel Group faces significant financial challenges, with negative profitability metrics and declining revenue. Despite a stable balance sheet with manageable debt, the negative cash flow due to high capital expenditures is a concern. The company must focus on improving operational efficiency and cash management.

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	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
EBITDA	-15.00M	-72.80M	281.70M	489.30M	1.29B	171.90M
Net Income	-125.00M	-222.67M	105.20M	298.50M	857.70M	-76.10M
Balance Sheet
Total Assets	3.09B	3.19B	2.68B	2.46B	2.69B	1.55B
Cash, Cash Equivalents and Short-Term Investments	226.50M	267.00M	97.90M	247.40M	915.30M	21.20M
Total Debt	654.50M	659.60M	146.10M	122.30M	96.20M	629.40M
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 Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 9.13
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• 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 9.13 is above the 20-day moving average (MA) of 8.55, above the 50-day MA of 7.92, and below the 200-day MA of 11.03, indicating a neutral trend. The MACD of 0.45 indicates Negative momentum. The RSI at 58.94 is Neutral, neither overbought nor oversold. The STOCH value of 56.18 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
ASTL	54 Neutral	$958.05M	―	-12.92%	3.05%	―	―
Sector *	44 Neutral	C$953.01M	-6.70	-13.31%	2.79%	17.55%	-32.28%
TGB		$969.94M	10.75	-12.40%	―	―	―
LIF	78 Outperform	C$1.82B	13.30	20.74%	9.64%	3.67%	-6.05%
VNP	71 Outperform	C$784.69M	25.80	15.41%	―	28.27%	36.49%
TSL	49 Neutral	C$64.21M	―	-3.69%	2.43%	-9.16%	-311.26%
ABBRF		$537.40M	―	-67.76%	―	―	―

Algoma Steel Group Corporate Events

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.