ArcelorMittal (NYSE: MT) and Northwest Pipe (NASDAQ:NWPX) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, institutional ownership, profitability and earnings.

Earnings and Valuation

This table compares ArcelorMittal and Northwest Pipe’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
ArcelorMittal $56.79 billion 0.52 $1.78 billion $3.33 8.75
Northwest Pipe $156.26 million 1.09 -$9.26 million ($0.23) -77.13

ArcelorMittal has higher revenue and earnings than Northwest Pipe. Northwest Pipe is trading at a lower price-to-earnings ratio than ArcelorMittal, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares ArcelorMittal and Northwest Pipe’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ArcelorMittal 5.50% 10.52% 4.58%
Northwest Pipe -1.59% -3.03% -2.67%

Risk & Volatility

ArcelorMittal has a beta of 2.19, suggesting that its share price is 119% more volatile than the S&P 500. Comparatively, Northwest Pipe has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500.

Insider and Institutional Ownership

3.6% of ArcelorMittal shares are owned by institutional investors. Comparatively, 83.3% of Northwest Pipe shares are owned by institutional investors. 0.1% of ArcelorMittal shares are owned by company insiders. Comparatively, 2.0% of Northwest Pipe shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for ArcelorMittal and Northwest Pipe, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ArcelorMittal 1 2 10 0 2.69
Northwest Pipe 0 1 0 0 2.00

ArcelorMittal presently has a consensus price target of $32.66, indicating a potential upside of 12.09%. Northwest Pipe has a consensus price target of $9.00, indicating a potential downside of 49.27%. Given ArcelorMittal’s stronger consensus rating and higher possible upside, equities research analysts plainly believe ArcelorMittal is more favorable than Northwest Pipe.

Summary

ArcelorMittal beats Northwest Pipe on 10 of the 13 factors compared between the two stocks.

About ArcelorMittal

ArcelorMittal S.A. (ArcelorMittal) is a holding company. The Company, together with its subsidiaries, owns and operates steel manufacturing and mining facilities in Europe, North and South America, Asia and Africa. ArcelorMittal operates through five segments, which include NAFTA; Europe; Brazil; Africa and Commonwealth of Independent States (ACIS), and Mining. The NAFTA segment produces flat, long and tubular products. The Brazil segment includes the flat operations of Brazil, and the long and tubular operations of Brazil and neighboring countries. The Europe segment is the flat steel producer in Europe. The ACIS segment produces a combination of flat, long products and tubular products. The Mining segment comprises all mines owned by ArcelorMittal in the Americas, Asia, Europe and Africa. It produces a range of finished and semi-finished steel products (semis).

About Northwest Pipe

Northwest Pipe Company is a manufacturer of engineered steel pipe water systems. The Company operates through two segments. The Water Transmission segment produces steel pipeline systems for use in drinking water infrastructure, and has approximately eight manufacturing facilities, located in Portland, Oregon; Denver, Colorado; Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas; St. Louis, Missouri; Salt Lake City, Utah, and Monterrey, Mexico. The Tubular Products segment produces steel line pipe products for energy applications, and has a manufacturing facility located in Atchison, Kansas. The Company, through Water Transmission Group, produces engineered welded steel pipe products for use in water transmission applications. It also manufactures smaller diameter electric resistance welded (ERW) steel pipe through its Tubular Products Group. The Company’s solutions-based products are used in water transmission, plant piping, tunnels and river crossings applications.

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