Ternium SA (TX) AI Stock Analysis

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Ternium SA

(NYSE:TX)

62Neutral

Ternium SA's overall stock score reflects a balance of strengths and challenges. The company benefits from a strong balance sheet and strategic initiatives, but declining profitability and valuation concerns weigh on the outlook. Positive technical indicators and a high dividend yield offer some appeal, but profitability and market challenges suggest a cautious stance.

Ternium SA (TX) vs. S&P 500 (SPY)

Market Cap

$5.20B

Dividend Yield11.7%

Average Volume (3M)283.62K

Price to Earnings (P/E)73.5

Beta (1Y)0.70

Revenue Growth0.81%

EPS Growth-108.00%

CountryUS

Employees33,949

SectorBasic Materials

Sector Strength57

IndustrySteel

Share Statistics

EPS (TTM)-0.27

Shares Outstanding196,307,680

10 Day Avg. Volume205,926

30 Day Avg. Volume283,622

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.36

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

$38.40

Price Target Upside55.91% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering5

Ternium SA Business Overview & Revenue Model

Company DescriptionTernium S.A. manufactures, processes, and sells various steel products in Mexico, Argentina, Paraguay, Chile, Bolivia, Uruguay, Brazil, the United States, Colombia, Guatemala, Costa Rica, Honduras, El Salvador, and Nicaragua. It operates through two segments, Steel and Mining. The Steel segment offers slabs, billets and round bars, hot rolled flat products, merchant bars, reinforcing bars, stirrups and rods, tin plate and galvanized products, tubes, beams, insulated panels, roofing and cladding, roof tiles, steel decks, pre-engineered metal building systems, and pig iron products; and sells energy. The Mining segment sells iron ore and pellets. The company also provides medical and social; scrap; and engineering and other services, as well as operates as a distribution company. It serves various companies and small businesses in the construction, automotive, home appliances, agro, packaging, transport, and energy industries. The company was founded in 1961 and is based in Luxembourg City, Luxembourg. Ternium S.A. is a subsidiary of Techint Holdings S.à r.l.

How the Company Makes MoneyTernium SA makes money through the production and sale of steel and steel-related products. Its revenue model is primarily driven by the sale of flat and long steel products, which are used in various industries including construction, automotive, and manufacturing. Key revenue streams include the direct sale of these products to industrial clients and through distribution channels across Latin America and other regions. The company benefits from strategic partnerships and joint ventures which enhance its production capabilities and market reach. Additionally, Ternium's vertical integration allows it to control costs and maintain competitive pricing in the market.

Ternium SA Financial Statement Overview

Summary

Ternium SA's financial performance shows mixed results. While the company has a strong balance sheet with low leverage and a solid equity base, profitability has declined with a negative net profit margin and reduced free cash flow. Maintaining operational efficiency and improving cash flow are necessary for future stability.

Income Statement

Neutral

Ternium SA experienced a decline in revenue growth from 2023 to 2024, with total revenue slightly increasing but gross profit and net income decreasing significantly. The net profit margin turned negative in 2024, indicating challenges in profitability. However, the company maintained a positive EBITDA margin, reflecting some operational efficiency.

Balance Sheet

Positive

The company maintains a healthy balance sheet with a debt-to-equity ratio of 0.20, indicating low leverage. The equity ratio stands at 51.7%, showing a solid equity base relative to total assets. However, the negative net income in 2024 impacted the return on equity, which was negative for the year.

Cash Flow

Neutral

Operating cash flow remains strong, but free cash flow declined significantly from 2023 to 2024, reflecting increased capital expenditures. The free cash flow to net income ratio turned unfavorable due to the negative net income, indicating potential challenges in cash generation relative to earnings.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
17.65B	17.61B	16.41B	16.09B	8.74B
	Gross Profit
2.88B	5.26B	3.93B	6.20B	1.64B
	EBIT
1.26B	2.20B	2.70B	5.27B	1.08B
	EBITDA
1.88B	2.21B	3.33B	5.96B	1.77B
	Net Income Common Stockholders
-53.67M	676.04M	1.77B	3.83B	778.47M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.85B	3.82B	3.53B	2.57B	1.35B
	Total Assets
23.13B	24.18B	17.49B	17.10B	12.86B
	Total Debt
2.44B	1.47B	1.27B	1.74B	2.02B
	Net Debt
748.98M	-371.37M	-382.31M	462.11M	1.48B
	Total Liabilities
7.00B	7.37B	3.72B	4.86B	4.41B
	Stockholders Equity
11.97B	12.42B	11.85B	10.54B	7.29B
Cash Flow		Free Cash Flow
40.74M	1.04B	2.17B	2.15B	1.20B
	Operating Cash Flow
1.91B	2.50B	2.75B	2.68B	1.76B
	Investing Cash Flow
-1.38B	-1.47B	-1.32B	-1.05B	-1.18B
	Financing Cash Flow
-488.38M	-766.36M	-1.02B	-854.38M	-506.25M

Ternium SA Technical Analysis

Technical Analysis Sentiment

Negative

Last Price24.63

Price Trends

50DMA

30.52

Negative

100DMA

30.71

Negative

200DMA

32.51

Negative

Market Momentum

MACD

0.24

Positive

RSI

46.01

Neutral

STOCH

17.60

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TX, the sentiment is Negative. The current price of 24.63 is below the 20-day moving average (MA) of 31.40, below the 50-day MA of 30.52, and below the 200-day MA of 32.51, indicating a bearish trend. The MACD of 0.24 indicates Positive momentum. The RSI at 46.01 is Neutral, neither overbought nor oversold. The STOCH value of 17.60 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TX.

Ternium SA Risk Analysis

Ternium SA disclosed 47 risk factors in its most recent earnings report. Ternium SA reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Ternium SA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (47)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GGB	74 Outperform	$5.17B	6.34	8.98%	5.61%	-9.51%	-45.87%
SIM	74 Outperform	$4.32B	6.48	21.66%	―	-20.47%	109.44%
CMC	66 Neutral	$4.63B	68.01	1.78%	1.77%	-7.93%	-89.29%
TX	62 Neutral	$5.20B	73.52	-0.44%	11.70%	0.81%	-108.00%
SID	60 Neutral	$1.81B	―	-17.19%	14.64%	-10.94%	-756.50%
X	60 Neutral	$8.67B	24.50	3.43%	0.45%	-13.48%	-56.94%
Sector *	47 Neutral	$2.35B	-2.91	-21.55%	3.59%	4.17%	-28.20%

* Basic Materials Sector Average

Performance Comparison

Ternium SA

24.63

-16.00

-39.38%

CMC

Commercial Metals Company

39.20

-18.24

-31.75%

GGB

Gerdau SA

2.46

-1.21

-32.97%

SIM

Grupo Simec SA De CV

26.62

-5.88

-18.09%

SID

Companhia Siderúrgica Nacional

1.31

-1.43

-52.19%

United States Steel

44.05

2.33

5.58%

Ternium SA Earnings Call Summary

Earnings Call Date: Feb 18, 2025 | % Change Since: -21.49% | Next Earnings Date: Apr 29, 2025

Earnings Call Sentiment Neutral

The earnings call highlights Ternium's strong financial position and strategic advancements, such as downstream expansion and renewable energy projects. However, this is countered by significant challenges, including trade uncertainties, market weaknesses in key regions, and the impact of increased Chinese steel exports. Overall, the sentiment is balanced with both positive developments and notable challenges.

Highlights

Strong Financial Position

Ternium reported shipments of 16 million tons for 2024 with an adjusted EBITDA of $2 billion on a 12% margin. The company's net cash position remains strong at $1.6 billion by the end of December, even with significant CapEx and dividend payouts.

Downstream Expansion Progress in Mexico

Significant progress on the downstream expansion project in Mexico, including the start of operations at the pickling line and finishing center. Two remaining lines are under construction, with planned startups by the end of 2025.

Wind Farm Initiative in Argentina

The wind farm in Argentina began generating energy, expected to deliver approximately 480 gigawatt-hours per year, providing substantial economic benefits and assisting in decarbonization goals.

Operational Improvement in Brazil

Brazil experienced a positive year with a 10% increase in flat steel consumption and vehicle production. Usiminas achieved significant operational improvements, producing 3.2 million tons of crude steel.

Educational Initiatives

Ternium opened the Roberto Roca Technical School in Brazil, providing high-quality technical education and scholarships to students, reflecting the company's commitment to community development.

Lowlights

Trade Uncertainties and Challenges

A surge in US trade actions has created substantial uncertainty in the global market, particularly affecting Mexico and Canada, with potential impacts on the steel industry.

Market Weakness in Mexico

Shipments in Mexico decreased due to weaker-than-expected commercial market activity and weak government infrastructure investment.

Significant Steel Imports from China

China's increased steel exports have significantly disrupted markets, particularly in Brazil, where imports from China accounted for approximately 80% of flat steel imports.

Decline in Argentina's Shipments

Argentina experienced a year-over-year shipment decline of approximately 20%, primarily due to macroeconomic measures aimed at addressing economic imbalances.

Decreased EBITDA and Net Income

Adjusted EBITDA decreased due to lower realized prices and reduction in shipments. The net income decline was affected by foreign exchange results and the depreciation of the Brazilian real.

Company Guidance

During the Ternium Fourth Quarter 2024 Results Conference Call, the company reported shipments of 16 million tons for the year, generating an adjusted EBITDA of $2 billion with a margin of 12%. Despite a challenging year for the steel industry, Ternium maintained a robust net cash position of $1.6 billion at the end of December 2024, even with capital expenditures nearing $2 billion and dividends paid exceeding $600 million. The call highlighted significant progress in Ternium's downstream expansion project in Mexico, including the operational startup of the pickling line and finishing center in Pesqueria, with ongoing construction of a cold rolling mill and a hot-dip galvanized line slated for completion by December 2025. Additionally, Ternium's wind farm in Argentina began generating energy, with 22 wind turbines installed and an expected annual output of 480 gigawatt-hours. The company expressed optimism about navigating potential trade uncertainties, emphasizing the importance of the USMCA in maintaining competitiveness and integration in the North American market. Furthermore, Ternium announced a proposed annual dividend of $2.70 per ADS, reflecting a dividend yield of approximately 9%.

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.