Salzgitter (OTCMKTS:SZGPY – Get Free Report) and Algoma Steel Group (NASDAQ:ASTL – Get Free Report) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.
Analyst Recommendations
This is a summary of current ratings for Salzgitter and Algoma Steel Group, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Salzgitter | 2 | 3 | 3 | 1 | 2.33 |
| Algoma Steel Group | 1 | 4 | 0 | 0 | 1.80 |
Earnings & Valuation
This table compares Salzgitter and Algoma Steel Group”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Salzgitter | $10.83 billion | 0.25 | -$381.12 million | ($0.40) | -12.69 |
| Algoma Steel Group | $2.07 billion | 0.20 | -$62.28 million | ($4.75) | -0.83 |
Algoma Steel Group has lower revenue, but higher earnings 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.
Insider and Institutional Ownership
72.0% of Algoma Steel Group shares are held by institutional investors. 7.8% of Algoma Steel Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Risk and Volatility
Salzgitter has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500. Comparatively, Algoma Steel Group has a beta of 1.56, meaning that its stock price is 56% more volatile than the S&P 500.
Dividends
Salzgitter pays an annual dividend of $0.01 per share and has a dividend yield of 0.2%. Algoma Steel Group pays an annual dividend of $0.10 per share and has a dividend yield of 2.6%. Salzgitter pays out -2.5% of its earnings in the form of a dividend. Algoma Steel Group pays out -2.1% 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.
Profitability
This table compares Salzgitter and Algoma Steel Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Salzgitter | -2.09% | -4.31% | -1.83% |
| Algoma Steel Group | -31.27% | -15.13% | -6.51% |
Summary
Salzgitter beats Algoma Steel Group on 10 of the 16 factors compared between the two stocks.
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.
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.
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