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TX

Ternium NYSE:TX Stock Report

Last Price

US$35.48

Market Cap

US$7.0b

7D

2.8%

1Y

-36.8%

Updated

14 Aug, 2022

Data

Company Financials +
TX fundamental analysis
Snowflake Score
Valuation5/6
Future Growth0/6
Past Performance5/6
Financial Health6/6
Dividends5/6

TX Stock Overview

Ternium 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.

Ternium Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Ternium
Historical stock prices
Current Share PriceUS$35.48
52 Week HighUS$56.74
52 Week LowUS$29.83
Beta1.45
1 Month Change14.12%
3 Month Change-11.98%
1 Year Change-36.82%
3 Year Change110.69%
5 Year Change21.30%
Change since IPO51.82%

Recent News & Updates

Aug 04

Ternium: A Brilliant Quarter, But Weakness To Be Expected

Ternium is a large steel producer, focusing on South America and Mexico. The company has used its massive amount of free cash flow in the first semester to pay historical tax liabilities. The balance sheet is still in an excellent shape with a net cash + investments position of about $5.5 per ADS. This should enable TX to get through the volatile period. Introduction There's one common theme in the steel sector: make hay while the sun shines as the sentiment may change very fast. That's what we are experiencing right now because after the record profits generated by steel producers in Q1 and Q2 of this year, investors will have to brace for much lower results in Q3 (and likely, Q4) as the steel price has dropped. Most steel companies played it smart and used the cash windfall to shore up their balance sheets. Ternium (TX), a South America focused steel producer, generated about 25% of its current market cap in earnings in the first half of the year, thereby greatly reducing its balance sheet risk, but the company is also preparing for a decline in its earnings. TX data by YCharts An exceptionally strong earnings performance by Ternium As the steel price and production were relatively stable in Q1 and Q2 with an output of approximately 2.95 million tonnes of steel per quarter and an average sales price of just over $1400/t and $1471/t in Q1 and Q2, respectively, it makes sense to look at the company's H1 performance as a whole. The total revenue in the first semester of this year was almost $8.8B, an increase of almost 25% compared to the first semester of last year. Unfortunately, the COGS increased by about a third which meant the gross profit increased by just over 3% which is perhaps slightly disappointing. On top of that, the SG&A expenses increased by almost a third as well resulting in a decrease in the operating income by approximately 2%. Ternium Investor Relations That's still fine as Ternium obviously reports in US Dollar but incurs expenses and other items in the currency of the countries it is active in. So there is bound to be some fluctuation in the results. And with a pre-tax income of $2.2B and a net income of $1.81B, can we really be disappointed? Keep in mind a portion of the total net income is attributable to non-controlling interests and the net income attributable to the Ternium shareholders was $1.57B for an EPS of $0.80. Each ADS consists of 10 underlying shares, which means the EPS per ADS was $8 in the first semester. Slightly below the $8.3 in H1 2021, but obviously, this is still very decent. That's great, but we shouldn't even think about the H2 results coming even remotely close to the H1 EPS and free cash flow (which I will discuss later in this article). Ternium is pointing to the rapidly changing circumstances and is expecting a tough combination of lower steel prices and higher operating expenses in the third quarter. This basically means the EBITDA and EBITDA margins will start to contract due to this 'double whammy'. Unfortunately, Ternium hasn't provided more details other than it is expecting 'an EBITDA decrease' due to these lower margins. The free cash flow was mainly used to settle historical tax liabilities As my previous investment theses, not just in the past few quarters but for the past few years, were focusing on free cash flow results, it's important to make sure Ternium is still performing as planned. The reported operating cash flow was $687M. This includes a $350M investment in the working capital position and more importantly, a $1.085B tax payment although only $400M is due based on the H1 results. The majority of these payments are related to what the company owes based on historical earnings. The adjusted operating cash flow (this time also including the $25M in lease payments) was approximately $1.7B. Ternium Investor Relations The total capex was $286M resulting in a net free cash flow of just over $1.4B and even if we would deduct the entire $239M attributable to minority interests, the adjusted free cash flow attributable to the Ternium shareholders in the first half of the year was approximately $1.15B. Due to the payment of those historical tax liabilities, the net cash hasn't changed much. As of the end of June, the company had about $2.05B in cash and 'other investments', offset by $1.1B in debt for a net cash position of approximately $950M. Of interest is the small increase in deferred tax assets (up $62M) and the rather sharp decrease in the non-current tax liabilities ($58M) and current tax liabilities (down $815M). Ternium Investor Relations

Jun 22
We Think Ternium (NYSE:TX) Can Manage Its Debt With Ease

We Think Ternium (NYSE:TX) Can Manage Its Debt With Ease

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says...

May 18
Investors Shouldn't Overlook Ternium's (NYSE:TX) Impressive Returns On Capital

Investors Shouldn't Overlook Ternium's (NYSE:TX) Impressive Returns On Capital

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Amongst other things...

May 17

Ternium S.A. And Its Real Value

Ternium S.A. saw dramatic increases in revenue and profits in 2021 with a more than 400% increase in earnings per share compared to 2020. The company’s stock pays a significant dividend which can make it look more attractive as interest rates continue to increase. It is questionable whether the dramatic earnings growth is sustainable moving forward. This article tells what investors could likely make in the future with Ternium S.A. and what the real value is versus the current share price.

Shareholder Returns

TXUS Metals and MiningUS Market
7D2.8%4.8%3.2%
1Y-36.8%-11.9%-10.2%

Return vs Industry: TX underperformed the US Metals and Mining industry which returned -11.9% over the past year.

Return vs Market: TX underperformed the US Market which returned -10.2% over the past year.

Price Volatility

Is TX's price volatile compared to industry and market?
TX volatility
TX Average Weekly Movement5.9%
Metals and Mining Industry Average Movement9.3%
Market Average Movement7.7%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: TX is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: TX's weekly volatility (6%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
196120,142Maximo Vedoyahttps://www.ternium.com

Ternium 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.

Ternium Fundamentals Summary

How do Ternium's earnings and revenue compare to its market cap?
TX fundamental statistics
Market CapUS$6.96b
Earnings (TTM)US$3.77b
Revenue (TTM)US$17.66b

1.8x

P/E Ratio

0.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
TX income statement (TTM)
RevenueUS$17.66b
Cost of RevenueUS$11.39b
Gross ProfitUS$6.27b
Other ExpensesUS$2.50b
EarningsUS$3.77b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Nov 03, 2022

Earnings per share (EPS)19.23
Gross Margin35.51%
Net Profit Margin21.37%
Debt/Equity Ratio7.9%

How did TX perform over the long term?

See historical performance and comparison

Dividends

10.1%

Current Dividend Yield

9%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is TX undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for TX?

Other financial metrics that can be useful for relative valuation.

TX key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.5x
Enterprise Value/EBITDA1.4x
PEG Ratio-0.08x

Price to Earnings Ratio vs Peers

How does TX's PE Ratio compare to its peers?

TX PE Ratio vs Peers
The above table shows the PE ratio for TX vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average5.2x
X United States Steel
1.2x-64.4%US$6.0b
SIM Grupo Simec. de
8.4x-9.1%US$4.5b
CMC Commercial Metals
4.9x-35.4%US$5.3b
RS Reliance Steel & Aluminum
6.3x-16.0%US$12.0b
TX Ternium
1.8x-23.6%US$7.0b

Price-To-Earnings vs Peers: TX is good value based on its Price-To-Earnings Ratio (1.8x) compared to the peer average (5.2x).


Price to Earnings Ratio vs Industry

How does TX's PE Ratio compare vs other companies in the US Metals and Mining Industry?

Price-To-Earnings vs Industry: TX is good value based on its Price-To-Earnings Ratio (1.8x) compared to the US Metals and Mining industry average (8.2x)


Price to Earnings Ratio vs Fair Ratio

What is TX's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

TX PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio1.8x
Fair PE Ratio8.1x

Price-To-Earnings vs Fair Ratio: TX is good value based on its Price-To-Earnings Ratio (1.8x) compared to the estimated Fair Price-To-Earnings Ratio (8.1x).


Share Price vs Fair Value

What is the Fair Price of TX when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: TX ($35.48) is trading below our estimate of fair value ($83.38)

Significantly Below Fair Value: TX is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Ternium forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


-23.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TX's earnings are forecast to decline over the next 3 years (-23.6% per year).

Earnings vs Market: TX's earnings are forecast to decline over the next 3 years (-23.6% per year).

High Growth Earnings: TX's earnings are forecast to decline over the next 3 years.

Revenue vs Market: TX's revenue is expected to decline over the next 3 years (-7.7% per year).

High Growth Revenue: TX's revenue is forecast to decline over the next 3 years (-7.7% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: TX's Return on Equity is forecast to be low in 3 years time (9.4%).


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Past Performance

How has Ternium performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


33.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: TX has high quality earnings.

Growing Profit Margin: TX's current net profit margins (21.4%) are higher than last year (19.9%).


Past Earnings Growth Analysis

Earnings Trend: TX's earnings have grown significantly by 33.9% per year over the past 5 years.

Accelerating Growth: TX's earnings growth over the past year (59.2%) exceeds its 5-year average (33.9% per year).

Earnings vs Industry: TX earnings growth over the past year (59.2%) underperformed the Metals and Mining industry 93%.


Return on Equity

High ROE: TX's Return on Equity (31.5%) is considered high.


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Financial Health

How is Ternium's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: TX's short term assets ($9.0B) exceed its short term liabilities ($2.6B).

Long Term Liabilities: TX's short term assets ($9.0B) exceed its long term liabilities ($1.5B).


Debt to Equity History and Analysis

Debt Level: TX has more cash than its total debt.

Reducing Debt: TX's debt to equity ratio has reduced from 28.2% to 7.9% over the past 5 years.

Debt Coverage: TX's debt is well covered by operating cash flow (221.1%).

Interest Coverage: TX earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet


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Dividend

What is Ternium current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


10.15%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: TX's dividend (10.15%) is higher than the bottom 25% of dividend payers in the US market (1.47%).

High Dividend: TX's dividend (10.15%) is in the top 25% of dividend payers in the US market (3.95%)


Stability and Growth of Payments

Stable Dividend: TX's dividend payments have been volatile in the past 10 years.

Growing Dividend: TX's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (9.4%), TX's dividend payments are thoroughly covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (37.4%), TX's dividend payments are well covered by cash flows.


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Management

How experienced are the management team and are they aligned to shareholders interests?

7.6yrs

Average management tenure


CEO

Maximo Vedoya (51 yo)

4.42yrs

Tenure

Mr. Maximo Vedoya serves as Chief Executive Officer of Ternium S.A. since March 1, 2018. Mr. Vedoya is an Industrial Engineer and holds a Master in Science of Management degree from Stanford University. Wi...


Leadership Team

Experienced Management: TX's management team is seasoned and experienced (7.6 years average tenure).


Board Members

Experienced Board: TX's board of directors are seasoned and experienced ( 16.6 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Ternium S.A.'s employee growth, exchange listings and data sources


Key Information

  • Name: Ternium S.A.
  • Ticker: TX
  • Exchange: NYSE
  • Founded: 1961
  • Industry: Steel
  • Sector: Materials
  • Implied Market Cap: US$6.965b
  • Shares outstanding: 196.31m
  • Website: https://www.ternium.com

Number of Employees


Location

  • Ternium S.A.
  • 26 Boulevard Royal
  • 4th Floor
  • Luxembourg City
  • 2449
  • Luxembourg

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/14 00:00
End of Day Share Price2022/08/12 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.