Ternium's Investor Day Seems To Have Restored Some Confidence

Ternium (TX) shares have had a poor year, underperforming the ADRs of ArcelorMittal (MT) and Gerdau (GGB), as well as the shares of other steel companies like Steel Dynamics (STLD). Although Ternium is looking at an attractive long-term opportunity to grow its share of the Mexican market, investors have been scared off by a host of uncertainties, including the NAFTA renegotiations, the Mexican election cycle, the deterioration of the Argentine economy, uncertainty in Brazil, weakness in Colombia, and the prospect of peaking global steel prices.

Management’s investor day earlier this month did seem to restore some confidence to investors, but the shares continue to look surprisingly cheap on a relative basis, particularly when factoring in the company’s strong margins. Although I remain concerned we’re past the peak in steel and that it will tough for any steel stock to significantly outperform, Ternium’s share price and valuation just look too low to me.

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Ternium's Investor Day Seems To Have Restored Some Confidence