Saturday 15 June 2013

Analysis of Aperam

A French steel company

Company: Aperam

Business: Steel production that is organized in three divisions: Stainless & Electrical Steel, Service & Solutions and Alloys & Specialties
Active: The have six main plants located in Brazil, Belgium and France. Besides from the production sites they are operating in 40 different countries.

P/E: -8.8

Also this company came from a request as can be seen here. Since the company is a recent spin-off from ArcelorMittal it has very little to show for itself and the analysis becomes also accordingly.

The P/E due to their losses is negative. The P/B is very good with 0.3 but all of it is tied up in equipment by the look of it. They don´t even have enough cash to cover their short debts which is dangerous. Graham would not buy this stock because they are far too young of a company that have not even proven that they can stand on their two own feet. E/S is of course also bad due to the loss. The book to debt is very good. In the last three years they have had a negative growth of -2% so it seems as if ArcelorMittal kicked them out at a good moment for them but not so good for the people stepping in as shareholders and we can see how the price has dropped from the IPO of 30€ down to 10€ which is today. No real motivated P/E to give this company because I can not even consider it to have some kind of normal growth based on previous years. they pay no dividends.

Conclusion: I would not buy this company. My feeling is that ArcelorMittal sold it off at a very good moment for steel industry and it can take years until that appears again. One could probably keep track of the yearly reports to see if a change is coming and then jump in but I would not do it today.

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