Over supply of Steel and Rising Energy Costs

Quantitative Analysis

• Stock is forecasted to have sequentially negative earnings growth momentum for fiscal 2023 and 2024 (below sector average).
  
  
• Stock P/E on a discount to sector.
  

KPI

• Market volatility in Europe is a headwind. Higher scrap margins on steel products add to the concerns. Global steel-making capacity exceeds demand for steel products in some regions globally. Excessive imports of steel into the United States continue to exert downward pressure on U.S. steel prices.
  
  
• Revenue forecasted to fall 1.57% in fiscal 2023 compared to fiscal 2022. It is also forecasted to continue falling a further 4.90% in fiscal 2024 compared to the estimated revenue of fiscal 2023.
  
  
• Net income before tax forecasted to fall in fiscal 2023 and 2024 due to scrap costs and uncertainties in Europe.
  
  
• Increase in crude oil and energy prices.
  

Trade Structure

Oct 55/50 Bear Put