Algoma Steel Group Inc. (NASDAQ: ASTL)

Sector: Basic Materials Industry: Steel CIK: 0001860805
Market Cap 504.16 Mn
P/B 0.80
P/E -1.01
P/S 0.31
ROIC (Qtr) -59.47
Div Yield % 3.23
Rev 1y % (Qtr) -13.99
Total Debt (Qtr) 539.20 Mn
Debt/Equity (Qtr) 0.85
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About

Investment thesis

Bull case

  • Strong tangible asset base of 1.76B provides 3.27x coverage of total debt 539.20M, indicating robust asset backing and low credit risk.
  • Free cash flow of (153.26M) provides excellent 352.50x coverage of dividends (434782.61), indicating sustainable shareholder returns.
  • Robust tangible asset base of 1.76B provides 3.66x coverage of working capital 482.10M, indicating strong operational backing.
  • Tangible assets of 1.76B provide robust 26.67x coverage of other current liabilities 66.16M, indicating strong asset backing.
  • Strong tangible asset base of 1.76B provides 8117.67x coverage of intangibles 217391.30, indicating robust asset quality.

Bear case

  • Operating cash flow of (73.26M) barely covers its investment activities of (89.35M), with a coverage ratio of 0.82, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 3.33M against inventory of 572.46M, the 0.01 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • The company's operating cash flow of (73.26M) shows concerning coverage of stock compensation expenses of (20.58M), with a 3.56 ratio indicating potential earnings quality issues.
  • Operating cash flow of (73.26M) provides minimal 0.43x coverage of tax expenses of (169.35M), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Operating earnings of (613.91M) show weak coverage of depreciation charges of 34.13M, with a -17.99 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Steel
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NUE Nucor Corp 58.33 Bn 74.96 2.91 6.85 Bn
2 STLD Steel Dynamics Inc 40.60 Bn 83.81 4.34 3.78 Bn
3 RS Reliance, Inc. 26.37 Bn 77.34 2.59 1.69 Bn
4 PKX Posco Holdings Inc. 19.54 Bn 56.38 0.39 19.69 Bn
5 CMC COMMERCIAL METALS Co 9.18 Bn 198.05 2.39 3.35 Bn
6 CLF Cleveland-Cliffs Inc. 5.34 Bn -3.62 0.29 7.25 Bn
7 WS Worthington Steel, Inc. 2.24 Bn 18.89 0.72 0.28 Bn
8 MTUS Metallus Inc. 0.97 Bn -116.67 0.86 0.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.40 1.89
EV to Cash from Ops. EV/CFO -9.57 4.54
EV to Debt EV to Debt 1.30 -3.26
EV to EBIT EV/EBIT -1.14 -15.16
EV to EBITDA EV/EBITDA -1.01 -139.64
EV to Free Cash Flow [EV/FCF] EV/FCF -4.58 46.24
EV to Market Cap EV to Market Cap 1.39 -0.56
EV to Revenue EV/Rev 0.44 2.70
Price to Book Value [P/B] P/B 0.80 8.16
Price to Earnings [P/E] P/E -1.01 22.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -829.35 -41.90
Dividend Payout Ratio % Div Payout % (Qtr) -3.30 41.41
Dividend per Basic Share Div per Share (Qtr) 0.15 0.99
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -7.39 24.68
Interest Coverage Int. cover (Qtr) -11.57 10.33
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -211.75 -25.11
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -99.00 72.27
Dividend Growth (1y) % Div 1y % (Qtr) -25.00 24.03
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -439.83 -69.57
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -1,167.35 -69.57
EBIT Growth (1y) % EBIT 1y % (Qtr) -498.08 -69.73
EBT Growth (1y) % EBT 1y % (Qtr) -376.65 -89.44
EPS Growth (1y) % EPS 1y % (Qtr) -332.53 -67.10
FCF Growth (1y) % FCF 1y % (Qtr) -115.33 -11.81
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -10,540.58 -592.10
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.66 0.83
Cash Payout Ratio Cash Payout (Qtr) 0.06 0.30
Cash Ratio Cash Ratio (Qtr) 0.01 11.50
Current Ratio Curr Ratio (Qtr) 2.29 15.74
Debt to Equity Ratio Debt/Equity (Qtr) 0.85 0.62
Interest Cover Ratio Int Coverage (Qtr) -11.57 10.33
Times Interest Earned Times Interest Earned (Qtr) -11.57 10.33
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -36.00 -0.83
EBIT Margin % EBIT Margin % (Qtr) -52.64 571.21
EBT Margin % EBT Margin % (Qtr) -41.44 -4.72
Gross Margin % Gross Margin % (Qtr) -16.50 17.71
Net Profit Margin % Net Margin % (Qtr) -30.90 -4.68