ArcelorMittal (ENXTAM:MT): Assessing Valuation After a 47.85% Share Price Rally in 2024

ArcelorMittal (ENXTAM:MT) has seen solid movement in its stock price in recent months, catching the interest of investors looking at trends in the steel sector. The company’s overall performance invites a closer look at its valuation and prospects.

See our latest analysis for ArcelorMittal.

ArcelorMittal’s share price has charged up an impressive 47.85% so far this year, with the recent 15.48% three-month return giving investors plenty to talk about. Momentum seems to be building again, which suggests optimism around the company’s broader turnaround and growth potential in the steel sector.

If you’re inspired by strong industrial rallies like this, now is an ideal time to broaden your horizons and discover fast growing stocks with high insider ownership

With ArcelorMittal’s rapid gains and solid financial growth, the big question remains: is the recent rally still leaving shares undervalued, or has the market already priced in the company’s rebound and future prospects?

Most Popular Narrative: 3.4% Undervalued

The most widely followed narrative currently values ArcelorMittal slightly higher than the last close, pricing it at $34.44 versus the market’s $33.28. This suggests analysts see incremental upside, not yet realized by recent share momentum, and underscores ongoing debates about the company's next phase of growth.

Strategic investments in green steel production (EAFs, DRI technology, renewable-backed projects) and early execution of decarbonization projects position ArcelorMittal to capture premium, higher-margin demand from eco-conscious customers. This drives margin expansion and supports long-term earnings.

Read the complete narrative.

Want to know why this narrative gives ArcelorMittal an edge? The analysts bake in bold expectations for profit margins and future earnings. The story hinges on ambitious expansion plans and new, higher-value market segments that could fundamentally shift the company’s growth path. How do all these projections stack up against the stock’s current price? Unlock the full narrative for all the surprising details that underpin this fair value calculation.

Result: Fair Value of $34.44 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, uncertainties remain, including high green transition costs and persistent global overcapacity. Both factors could pressure ArcelorMittal's margins and growth trajectory.

Find out about the key risks to this ArcelorMittal narrative.

Another View: SWS DCF Model Suggests Caution

While the consensus narrative finds ArcelorMittal undervalued, our SWS DCF model tells a different story. By estimating future cash flows, the DCF model values the company at €27.22, which is noticeably below today’s price of €33.28. Is the market too optimistic, or is it seeing something the model is missing?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out ArcelorMittal for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 849 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own ArcelorMittal Narrative

If you have your own take or want to draw your own conclusions from the numbers, it’s quick and easy to explore the data and craft a narrative that reflects your view. Do it your way.

A great starting point for your ArcelorMittal research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for More Investment Ideas?

Don't sit on the sidelines while other investors uncover tomorrow’s winners. Put your curiosity to work and expand your watchlist with truly unique opportunities:

• Tap into powerful yield potential by reviewing these 17 dividend stocks with yields > 3%, which consistently offer dividends above 3% and could strengthen your income stream.
• Spot the wave of disruption as you check out these 25 AI penny stocks, pushing the boundaries of artificial intelligence across multiple industries.
• Seize the chance to find undervalued gems by assessing these 849 undervalued stocks based on cash flows, built on cash flow fundamentals that the market may be overlooking.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com