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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