Company Overview
Ternium S.A. functions as a manufacturer and distributor of steel products with a geographic footprint spanning Mexico, the Southern Region, Brazil, and international markets. The company operates through two distinct segments, Steel and Mining, providing a diverse range of outputs including slabs, heavy plates, hot and cold rolled products, coated products, and stamped items. Operating within the Basic Materials sector and specifically the Steel industry, the firm is positioned as a significant player in the global production and distribution of essential industrial commodities. The company's scale is reflected in a market capitalization of $7.61B and an annual revenue of $15.61B, supported by a workforce of 33,253 employees. These valuation and revenue figures indicate that Ternium S.A. maintains a substantial operational footprint, suggesting it possesses significant market share and influence within the competitive steel manufacturing landscape.
Financial Health
The company reported a revenue of $15.61B for the trailing twelve months, generating a net income of $425.23M and an EBITDA of $1.42B during the same period. The substantial gap between the $15.61B in revenue and the $425.23M in net income reveals a cost structure where operating expenses, including cost of goods sold and overhead, consume a significant portion of total sales before reaching the bottom line. Free cash flow for the period stands at -$655,170,496, indicating that capital expenditures or working capital requirements exceeded cash generated from operations, which impacts immediate financial flexibility despite holding significant cash reserves. The gross margin is recorded at 15.0%, while the operating margin sits at 4.7%, and the profit margin is 2.7%; these figures collectively highlight the capital-intensive nature of the steel business where high fixed costs necessitate scale to achieve profitability. Regarding liquidity and leverage, the company holds $3.13B in cash against $2.61B in debt, resulting in a debt-to-equity ratio of 16.14, which suggests a highly leveraged balance sheet typical of the cyclical steel industry. The current ratio of 2.49 indicates that the company holds more than twice the value of current assets relative to its current liabilities, pointing to a robust short-term liquidity position. Finally, the Return on Equity is 1.9% and the Return on Assets is 1.9%, metrics that reveal current management effectiveness in generating returns is relatively low when viewed in isolation, though this must be contextualized within the broader economic environment of the sector.
Valuation Assessment
The trailing P/E ratio is 17.62, whereas the forward P/E is significantly lower at 6.24, implying that the market expects a sharp contraction in earnings or a substantial re-rating of the stock price to align with future expectations. The price-to-book ratio stands at 0.64, indicating that the market values the company at a discount relative to its tangible book value, a common characteristic for cyclical manufacturing firms facing temporary headwinds. Alternative valuation metrics provide further context, with a price-to-sales ratio of 0.49 and an EV/EBITDA of 56.18, suggesting that while the stock trades cheaply relative to sales, the enterprise value relative to earnings is elevated due to the low net income figure. The stock has exhibited significant volatility within the past year, trading between a 52-week low of $24.00 and a 52-week high of $45.57. Without a specific current price provided in the source data to calculate the exact percentage deviation, the range itself demonstrates the asset's sensitivity to market cycles, with the wide spread reflecting the cyclical nature of the steel commodity markets. The beta of 1.19 indicates that the stock price is generally more volatile than the broader market, moving approximately 19% more than the market index in response to systemic risks.
Growth & Income
Recent performance data shows a revenue growth year-over-year of -2.6% and an earnings growth year-over-year of -56.5%, indicating that earnings are contracting at a rate far exceeding the decline in revenue, which points to significant margin compression or one-time costs affecting profitability. The company distributes a dividend with a yield of 7.0%, yet the payout ratio is 122.7%, meaning the dividend payments exceed the reported net income for the period. This high payout ratio, combined with negative free cash flow, suggests that the current dividend may be partially funded by cash reserves or debt rather than sustainable organic earnings, raising questions about long-term sustainability without a turnaround in profitability. The overall growth and income profile presents a complex picture of a mature, high-yield asset currently experiencing a period of earnings contraction and aggressive capital deployment that has resulted in negative free cash flow.