Outokumpu (OTCMKTS:OUTKY) and ArcelorMittal (NYSE:MT) Head to Head Analysis

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

Volatility and Risk

ArcelorMittal has a beta of 1.65, indicating that its share price is 65% more volatile than the S&P 500. Comparatively, Outokumpu has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.

Dividends

ArcelorMittal pays an annual dividend of $0.47 per share and has a dividend yield of 1.4%. Outokumpu pays an annual dividend of $0.04 per share and has a dividend yield of 2.1%. ArcelorMittal pays out 14.5% of its earnings in the form of a dividend. Outokumpu pays out -80.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Outokumpu is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and target prices for ArcelorMittal and Outokumpu, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ArcelorMittal	0	5	3	0	2.38
Outokumpu	2	1	0	0	1.33

ArcelorMittal presently has a consensus target price of $32.96, indicating a potential downside of 2.77%. Given ArcelorMittal’s stronger consensus rating and higher possible upside, equities analysts clearly believe ArcelorMittal is more favorable than Outokumpu.

Earnings & Valuation

This table compares ArcelorMittal and Outokumpu”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ArcelorMittal	$62.44 billion	0.44	$1.34 billion	$3.24	10.46
Outokumpu	$6.43 billion	0.28	-$43.28 million	($0.05)	-37.80

ArcelorMittal has higher revenue and earnings than Outokumpu. Outokumpu 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 Outokumpu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ArcelorMittal	4.11%	4.99%	2.90%
Outokumpu	-0.82%	-1.33%	-0.82%

Institutional and Insider Ownership

9.3% of ArcelorMittal shares are held by institutional investors. 0.1% of ArcelorMittal shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

ArcelorMittal beats Outokumpu on 14 of the 16 factors compared between the two stocks.

About ArcelorMittal

ArcelorMittal S.A., together with its subsidiaries, operates as integrated steel and mining companies in the United States, Europe, and internationally. It offers semi-finished flat products, including slabs; finished flat products comprising plates, hot- and cold-rolled coils and sheets, hot-dipped and electro-galvanized coils and sheets, tinplate, and color coated coils and sheets; semi-finished long products, such as blooms and billets; finished long products consisting of bars, wire-rods, structural sections, rails, sheet piles, and wire-products; and seamless and welded pipes and tubes. The company also provides mining products, such as iron ore lumps, fines, concentrates, pellets, and sinter feeds; and coking coal. It sells its products to various customers in the automotive, appliance, engineering, construction, energy, and machinery industries through a centralized marketing organization, as well as distributors. The company has iron ore mining activities in Brazil, Bosnia, Canada, Liberia, Mexico, South Africa, and Ukraine. ArcelorMittal S.A. was founded in 1976 and is headquartered in Luxembourg City, Luxembourg.

About Outokumpu

Outokumpu Oyj produces and sells various stainless steel products in Finland, other European countries, North America, the Asia-Pacific, and internationally. The company operates through three segments: Europe, Americas, and Ferrochrome. It offers cold rolled coils, strips, and sheets; hot rolled coils, strips, and plates; quarto plates; precision strips; and specialized components, such as welded stainless-steel I-beams, H-beams, hollow-section tubes, bent profiles, structural sections, hardened and customized press plates, suction roll shells, and blancs and disks. The company also provides stainless steel powder which includes Supra 316L, Dura 17-4PH, Ultra 904L, Therma 253MA, Dura 4116, and Ni-free austenitic stainless steel powder; and nickel-based alloys. Its products are used in various applications, including commercial kitchen, cooking, food industry, and home appliances; automotive and transportation; building and infrastructure; energy; marine; and heavy industries. The company was founded in 1910 and is headquartered in Helsinki, Finland.