Algoma Steel Group (ASTL) AI Stock Analysis

• Market Cap: $699.41M
• Dividend Yield: 4.17%
• Average Volume (3M): 198.26K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.22
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: CA
• Employees: 2,818
• Sector: Basic Materials
• Sector Strength: 59
• Industry: Steel
• EPS (TTM): -2.10
• Shares Outstanding: 104,858,800
• 10 Day Avg. Volume: 187,695
• 30 Day Avg. Volume: 198,260
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.37
• Price to Cash Flow (P/CF): -3.00
• P/FCF Ratio: 0.00
• 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: C$14.95
• Price Target Upside: 124.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Algoma Steel Group is currently facing significant financial challenges, as evidenced by its negative earnings and cash flow issues. The stock's technical indicators suggest bearish momentum, and its valuation is unattractive due to the negative P/E ratio. However, the company has a strong liquidity position and strategic projects like the EAF transition, which offer potential for future improvement. Investors should weigh the risks associated with its current financial position against potential long-term gains from strategic advancements.

Positive Factors

Production Milestone

Despite some weather-related challenges, Algoma still expects to produce first steel by the end of CY1Q'25.

Project Liquidity

Algoma's liquidity is sufficient to complete the project despite the currently weak steel environment.

Negative Factors

Earnings Outlook

Lackluster contract prices and stagnant recovery in spot sheet prices are expected to lead to soft earnings.

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 makes money primarily through the production and sale of steel products, including hot and cold rolled steel sheets and plates. The company's revenue streams are largely driven by its ability to cater to various industries, such as automotive, construction, and energy, which require steel for manufacturing and infrastructure development. Algoma Steel may also engage in strategic partnerships and contracts with key clients, ensuring a stable demand for its products. Additionally, the company invests in technological advancements and operational efficiencies to optimize production costs and enhance profit margins. These factors, combined with a focus on sustainability, help Algoma Steel Group maintain a competitive edge in the steel market.

Algoma Steel Group Financial Statement Overview

Summary

Algoma Steel Group faces significant financial headwinds. The income statement shows declining revenue and profitability, the balance sheet indicates increased leverage, and cash flow statements highlight liquidity pressures. To improve its financial standing, the company must focus on enhancing operational efficiency, managing debt levels, and boosting cash flow generation.

Income Statement

Algoma Steel Group's income statement highlights significant challenges in profitability. The TTM (Trailing-Twelve-Months) data shows a gross loss and a negative net income, signaling financial difficulties. The revenue decline compared to the previous year further exacerbates concerns. While the company has experienced periods of profit in past years, the current trajectory raises red flags regarding its ability to generate sustainable profits.

Balance Sheet

The balance sheet reflects a moderate level of stability. The debt-to-equity ratio has increased, indicating higher leverage, but it remains at a manageable level. The equity ratio is stable, reflecting a balanced asset structure. However, the declining stockholders' equity and increased total debt suggest potential strains on financial flexibility. The company needs to carefully manage its liabilities to maintain financial health.

Cash Flow

Cash flow analysis reveals challenges in generating free cash flow, with negative figures in the TTM period. Operating cash flow has declined, and the free cash flow growth rate is negative, indicating pressure on liquidity. While there have been periods of positive operating cash flow, the current situation requires attention to improve cash generation and financial sustainability.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
2.49B	2.80B	2.78B	3.81B	1.79B	1.96B
	Gross Profit
-6.90M	282.30M	389.80M	1.51B	157.20M	-80.10M
	EBIT
-133.20M	167.30M	290.50M	1.41B	84.80M	-137.00M
	EBITDA
-2.80M	281.70M	489.30M	1.29B	171.90M	11.70M
	Net Income Common Stockholders
-157.30M	105.20M	298.50M	857.70M	-76.10M	-175.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
22.00M	97.90M	247.40M	915.30M	21.20M	265.00M
	Total Assets
1.98B	2.68B	2.46B	2.69B	1.55B	1.83B
	Total Debt
0.00	146.10M	122.30M	96.20M	629.40M	813.10M
	Net Debt
-22.00M	48.20M	-125.10M	-819.10M	608.20M	548.10M
	Total Liabilities
2.30B	1.17B	993.40M	1.11B	1.38B	1.53B
	Stockholders Equity
-324.10M	1.50B	1.46B	1.58B	173.80M	299.90M
Cash Flow		Free Cash Flow
-291.36M	-195.50M	-156.20M	1.10B	-63.70M	-118.60M
	Operating Cash Flow
110.14M	294.60M	177.30M	1.26B	8.10M	-4.70M
	Investing Cash Flow
-373.60M	-490.10M	-333.50M	-165.70M	-72.90M	-115.10M
	Financing Cash Flow
505.53M	44.70M	-569.60M	-198.70M	-167.40M	246.70M

Algoma Steel Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 6.67
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: 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 6.67 is below the 20-day moving average (MA) of 8.40, below the 50-day MA of 10.02, and below the 200-day MA of 12.25, indicating a bearish trend. The MACD of -0.63 indicates Positive momentum. The RSI at 29.50 is Positive, neither overbought nor oversold. The STOCH value of 6.40 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LIF	78 Outperform	C$1.72B	9.80	26.88%	11.38%	3.67%	-6.05%
MTL	73 Outperform	C$1.07B	9.54	11.27%	6.56%	-0.27%	-15.99%
Sector *	47 Neutral	$2.36B	-3.00	-21.73%	3.58%	3.97%	-28.71%
ASTL	44 Neutral	$699.41M	―	-10.29%	4.17%	―	―
S	43 Neutral	C$55.62M	―	-12.07%	―	-28.88%	-12.67%

Algoma Steel Group Corporate Events

Algoma Steel Reports 2024 Financial Results and Reaffirms EAF Project Outlook

Algoma Steel Group reported its financial results for the three and nine months ended December 31, 2024, showing a decrease in revenue and increased losses compared to the previous year. Despite these challenges, the company reaffirmed its outlook on the transformative Electric Arc Furnace project, which is expected to see its first arc in April, indicating a strategic shift that could impact its operations and market positioning.

Algoma Steel to Release Financial Results and Host Conference Call

Algoma Steel Group Inc. announced it will release its financial results for the three and nine months ended December 31, 2024, on March 12, 2025, following a change in its fiscal year-end. The company will host a webcast and conference call on March 13, 2025, to discuss the results and recent developments. This announcement reflects Algoma’s ongoing efforts to enhance transparency and engage with stakeholders as it continues its transformation journey towards sustainable steel production.

Algoma Steel Pursues Green Transformation Amid Challenges

Algoma Steel Group anticipates steel shipments of up to 550,000 tons for the quarter ended December 31, 2024, with an expected adjusted EBITDA loss between $55 million and $65 million. Despite challenges, the company is advancing its Electric Arc Furnace project, aiming for low-carbon production by 2025. Algoma remains focused on its transformation into a leading North American green steel producer.