Analyzing Algoma Steel Group (NASDAQ:ASTL) and Salzgitter (OTCMKTS:SZGPY)

Algoma Steel Group (NASDAQ:ASTL) and Salzgitter (OTCMKTS:SZGPY) are both basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, risk, dividends, earnings and valuation.

Institutional & Insider Ownership

72.0% of Algoma Steel Group shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Algoma Steel Group and Salzgitter”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Algoma Steel Group	$2.07 billion	0.21	-$62.28 million	($4.75)	-0.86
Salzgitter	$10.83 billion	0.23	-$381.12 million	($0.40)	-11.73

Algoma Steel Group has higher earnings, but lower revenue than Salzgitter. Salzgitter is trading at a lower price-to-earnings ratio than Algoma Steel Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Algoma Steel Group and Salzgitter’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Algoma Steel Group	-31.27%	-15.13%	-6.51%
Salzgitter	-2.09%	-4.31%	-1.83%

Volatility & Risk

Algoma Steel Group has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500. Comparatively, Salzgitter has a beta of 1.47, indicating that its share price is 47% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Algoma Steel Group and Salzgitter, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Algoma Steel Group	1	3	0	0	1.75
Salzgitter	2	3	3	1	2.33

Dividends

Algoma Steel Group pays an annual dividend of $0.10 per share and has a dividend yield of 2.5%. Salzgitter pays an annual dividend of $0.01 per share and has a dividend yield of 0.2%. Algoma Steel Group pays out -2.1% of its earnings in the form of a dividend. Salzgitter pays out -2.5% 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.

Summary

Salzgitter beats Algoma Steel Group on 10 of the 15 factors compared between the two stocks.

About Algoma Steel Group

Algoma Steel Group Inc. produces and sells steel products primarily in North America. The company provides flat/sheet steel products, including temper rolling, cold rolled, hot-rolled pickled and oiled products, floor plate, and cut-to-length products for the automotive industry, hollow structural product manufacturers, and the light manufacturing and transportation industries; and plate steel products that consist of rolled, hot-rolled, and heat-treated for use in the construction or manufacture of railcars, buildings, bridges, off-highway equipment, storage tanks, ships, and military applications. Algoma Steel Group Inc. was founded in 1901 and is headquartered in Sault Ste. Marie, Canada.

About Salzgitter

Salzgitter AG, together with its subsidiaries, engages in steel and technology businesses worldwide. It operates through four segments: Steel Production, Steel Processing, Trading, and Technology. The Steel Production segment manufactures steel and special steels, such as hot-rolled wide strip, steel sheet, sections, tailored blanks, as well as scrap trading. The Steel Processing segment produces various high-grade heavy plates; and manufactures line pipes, HFI-welded tubes, and precision and stainless-steel tubes. The Trading segment operates a European sales network, as well as trading companies and agencies worldwide. The Technology segment engages in the provision of machinery and plants for the filling and packaging of beverages, as well as special machinery engineering for shoe manufacturing and elastomer production. The company also provides IT, facility management, logistics, automotive engineering, and research and development services, as well as supplies raw materials. The company was founded in 1858 and is headquartered in Salzgitter, Germany.