Wednesday, May 16, 2018

Ternium Continues To Surpass Expectations And Still Seems Too Cheap

Ternium (TX) confounds me at times. This Mexico-focused steelmaker has an above-average track record when it comes to margins and returns on capital, operates in a pretty stable region, has access to multiple growth markets, and has been investing in growth projects at what appear to be good future IRRs. And yet, Ternium trades at one of the lowest forward multiples in the group even after a good run in the share price.

As Ternium continues to beat and raise, my expectations go up as well. I do see some risk that EBITDA could reach a near-term peak in 2019 or 2020, but the company’s leverage to recoveries in Argentina and Brazil makes that a tough call, and there are still significant opportunities to gain share in its home market. Even at 4x my new 2018 EBITDA estimate, it looks like there’s double-digit upside left in these shares.

Read the full article here:
Ternium Continues To Surpass Expectations And Still Seems Too Cheap

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