Buy Or Fear ArcelorMittal Stock?
ArcelorMittal (NYSE:MT) has delivered a respectable performance in 2025, yet the stock increasingly looks unattractive due to its modest operational momentum and financial fragility. Despite some strength in steel pricing, strategic acquisitions like full control of AM/NS Calvert, and operational diversification, and heavy sensitivity to commodity cycles leaves the business exposed—small dips in demand or price could significantly dent its earnings profile.
In Q2 2025, ArcelorMittal posted revenue of $15.9 billion, down approximately 2% year-over-year, with a sequential gain from Q1 driven by higher steel selling prices. EBITDA stood at $1.86 billion, slightly above analyst consensus of about $1.85 billion, aided by favorable price-cost dynamics in Europe and stronger contributions from India. Net income climbed to $1.79 billion, though this was buoyed by approximately $0.8 billion in exceptional gains; adjusted net income came in around $1.0 billion.
On the cash flow front, operating cash flow turned positive at roughly $1.4 billion in Q2, a marked improvement from Q1, largely due to a release in working capital. However, free cash flow for the first half of 2025 remains negative—hovering around a $0.8 billion outflow—after accounting for hefty capex (including strategic growth investments), shareholder payouts, M&A costs (notably the Calvert acquisition), and share buybacks. Reflecting these dynamics, net debt surged to $8.3 billion by June 30, 2025, up from $5.1 billion at year-end 2024.
ArcelorMittal’s current operating narrative underscores its cyclical nature. While it posted a sequential rebound in EBITDA, much of the boost stemmed from one-off gains and price-driven tailwinds. Core operating resilience remains elusive, and with steel demand forecasts trimmed—especially in light of U.S. tariffs and sluggish volumes—future momentum looks uncertain. Separately, see –Opendoor – OPEN Stock To $9? But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio is designed to reduce stock-specific risk while giving upside exposure.
[1] Valuation Looks Moderate
ArcelorMittal trades at a discount to the market. Its price-to-earnings ratio is 10.5, substantially lower than the S&P 500’s 24.4. On free cash flows however, the company is trading at 28.8x at a premium compared to the S&P500’s 21.5x.
[2] Growth Is Very Weak
ArcelorMittal’s growth has been very weak. Over the past three years, revenues have declined at an average annual rate of -10.6% versus 5.3% for the S&P 500. In the last twelve months, sales decreased -4.8% from $64 billion to $61 billion, and most recently, quarterly revenue decreased -2% year-over-year to 16 billion. By comparison, the index grew over 6.1%.
[3] Profitability Appears Very Weak
Over the past year, ArcelorMittal generated $1.9 billion in operating income, a 3.1% margin, alongside $4.9 billion in operating cash flow (8.1% margin), and $2.5 billion in net income (4.1% margin). ArcelorMittal’s operating, cash flow and net margins are significantly lower than the S&P500, which stands at 18.7%, 20.3%, and 12.6%, respectively, for the index.
[4] Financial Stability Looks Moderate
ArcelorMittal carries relatively high debt with a negligible cash balance. Its debt-to-equity ratio is 52.7%, above the S&P 500 average of 20.3%. Meanwhile, cash makes up 5.4% of total assets, compared with 7.1% for the index.
[5] Downturn Resilience Looks Very Weak
MT has fared worse than the S&P 500 index during various economic downturns. In the 2022 inflation shock, MT stock fell 46.8% vs. a peak-to-trough decline of 25.4% for the S&P 500. Additionally, in the 2020 Covid pandemic crisis, MT stock fell 61.4% vs. a peak-to-trough decline of 33.9% for the S&P 500.
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ArcelorMittal combines moderate valuation with very weak growth and profitability. Even at its moderate valuation, it makes the stock volatile, and currently unattractive for investors.
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