Critical Analysis: Algoma Steel Group (NASDAQ:ASTL) & Constellium (NYSE:CSTM)

Constellium (NYSE:CSTM) and Algoma Steel Group (NASDAQ:ASTL) are both materials companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Valuation and Earnings

This table compares Constellium and Algoma Steel Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Constellium	$9.58 billion	0.38	$273.00 million	$3.88	6.85
Algoma Steel Group	$1.54 billion	0.33	-$704.89 million	($7.35)	-0.65

Constellium has higher revenue and earnings than Algoma Steel Group. Algoma Steel Group is trading at a lower price-to-earnings ratio than Constellium, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Constellium and Algoma Steel Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Constellium	5.69%	51.66%	9.63%
Algoma Steel Group	-71.60%	-110.49%	-25.74%

Risk & Volatility

Constellium has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500. Comparatively, Algoma Steel Group has a beta of 1.64, indicating that its share price is 64% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Constellium and Algoma Steel Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Constellium	0	3	4	0	2.57
Algoma Steel Group	1	3	0	0	1.75

Constellium presently has a consensus price target of $35.80, indicating a potential upside of 34.76%. Given Constellium’s stronger consensus rating and higher probable upside, analysts clearly believe Constellium is more favorable than Algoma Steel Group.

Insider & Institutional Ownership

92.6% of Constellium shares are owned by institutional investors. Comparatively, 72.0% of Algoma Steel Group shares are owned by institutional investors. 1.2% of Constellium shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Constellium beats Algoma Steel Group on 13 of the 14 factors compared between the two stocks.

About Constellium

Constellium SE, together with its subsidiaries, engages in the design, manufacture, and sale of rolled and extruded aluminum products for the packaging, aerospace, automotive, defense, and other transportation and industry end-markets. The company operates through three segments: Packaging & Automotive Rolled Products, Aerospace & Transportation, and Automotive Structures & Industry. The Packaging & Automotive Rolled Products segment produces rolled aluminum products, including can stock and closure stock for the beverage and food industry, as well as foil stock for the flexible packaging market. This segment also supplies automotive body sheets and heat exchangers for the automotive market; and specialty reflective sheets. The Aerospace & Transportation segment provides rolled aluminum products, including aerospace plates, sheets, and extrusions; and aerospace wing skins, as well as plates and sheets for use in transportation, industry, and defense applications. The Automotive Structures & Industry segment offers extruded aluminium products and aluminium structural components for the automotive industry, including crash-management systems, body structures, side impact beams, and battery enclosures; and fabricates hard and soft alloy extruded profiles for various industry applications in the automotive, engineering, rail, and other transportation end markets. This segment also provides downstream technology and services, which include pre-machining, surface treatment, research and development, and technical support services. It sells its products directly or through distributors in France, Germany, the Czech Republic, the United Kingdom, Switzerland, and the United States, as well as Shanghai, and Seoul. The company was incorporated in 2010 and is headquartered in Paris, France.

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.