ARCELORMITTAL (MT): what the price assumes

In the published model solve dated 2026-Q2, anchored at $75.37, ARCELORMITTAL (MT) is priced for +18.8% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/MT

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.4pp.

Reconcile: at the x-ray's 9.3% required return this reads ~8.5%/yr; the models below use their own rates.

How unusual the bet is: within-range

Valuation X-Ray

The price is supported by earnings-power and relative-multiple value, while asset-based lands below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Earnings, Relative Families that call it expensive: Asset

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.7%); the inversion above states its own rate.

Per-Model Detail (n=17)

Solvency

Bullet Takeaways

• ArcelorMittal is one of the world's largest steelmakers, and the stock trades below its book value per share of about $74, the kind of discount the market applies to a cyclical commodity producer at an uncertain point in the cycle.
• The biggest risk is the steel cycle itself: returns on equity sit near 6%, below the cost of capital, so the value case depends on European trade policy and pricing lifting through-cycle margins rather than peak-year economics.
• Watch the rollout of European import measures and the buyback, which has already cut the share count sharply and concentrates each remaining share's claim on the business.

Bull Case

What the standard models struggle to capture here is that ArcelorMittal is being valued as if its mid-cycle steel economics are permanently impaired, and the recent results argue otherwise. The stock trades at roughly $63 (June 27, 2026) against a book value of about $74 per share, below the accounting value of the steel mills, mines, and inventory on the balance sheet. The earnings-power lens, which asks what the business is worth on normalized profit with no growth, lands near $98, and the Graham Number, a conservative blend of earnings and book value, lands near $83. When the methods anchored to demonstrated earnings power and assets sit well above the price, the market is pricing a cyclical trough, not a structural decline.

The operating evidence points to a higher floor than the cycle's worst years implied. First-quarter 2026 EBITDA per tonne reached $131, up $15 year over year and roughly 50% above historical averages, which management frames as a structural improvement rather than a price spike. Operating income improved to $753 million on higher steel prices and better segment performance, particularly in North America and Europe. A steelmaker that earns more per tonne across the cycle, not just at the peak, is worth more than a backward-looking trailing multiple suggests.

The capital-return story is where management has been most aggressive, and it compounds the value case. The company's buyback framework has already delivered a 38% reduction in share count and a doubling of the dividend, and our data shows the share count shrinking at roughly 8.8% a year. Buying back stock below book value is accretive arithmetic: each repurchase retires assets at a discount and lifts the per-share claim of every remaining holder. European trade measures, including carbon border adjustments and tariff-rate quotas, are designed to curb cheap imports and lift domestic capacity utilization, which would push through-cycle European profitability higher. The bull case is a deep-value asset, bought back hard below book, with a policy tailwind the trailing numbers do not yet reflect.

Bear Case

The bear case is best framed by which valuation methods are telling the truth, because they disagree sharply, and the more honest ones are the conservative ones. The flattering methods lean on growth assumptions a commodity producer cannot bank on: the Peter Lynch and growth-adjusted Graham approaches reach well above the price only by extrapolating a 21% historical EPS growth rate that is itself an artifact of a cyclical recovery off a trough. Steel earnings do not grow; they oscillate. Project a recovery year's growth rate forward and you get a fair value that evaporates the moment the cycle rolls over. The methods that strip out growth, the asset-value and zero-growth earnings lenses, cluster much closer to the current price, with Residual Income near $34 and the future-market-cap method near $34. Those are the lenses built for a business whose returns barely clear, and on a trailing basis fall short of, its cost of capital.

That is the structural problem. ArcelorMittal's trailing return on equity is about 5.7%, against a cost of equity above 9%. A company earning less on its equity than that equity costs is destroying value at the margin, which is why the stock trades below book. The discount is not a mistake the market will correct; it is the market's assessment that the steel business, across the full cycle, does not earn its keep. Reported quarterly profitability remains thin: Q1 2026 net income was $575 million on $15.5 billion of sales, a net margin of under 4% even in an improving quarter.

The cyclicality is the overhang the policy story cannot fully offset. Demand for steel tracks construction, autos, and industrial activity, all of which turn with the macro cycle, and ArcelorMittal's global footprint exposes it to Chinese overcapacity, European energy costs, and trade-policy reversals. The protective measures the bull case leans on, carbon border adjustments and import quotas, are policy promises subject to change, and they raise the company's own input and compliance costs even as they curb imports. Net debt of about $7.8 billion is well covered, with interest covered nearly nine times, so solvency is not the question. The question is whether through-cycle earnings ever clear the cost of capital, and the trailing returns say not yet.

Valuation

ArcelorMittal is a value-supported name, not a growth bet, and the price reflects it. At $63, inverting the current price implies modest company-wide operating growth of about 8.3% a year for five years, which for a steelmaker is less a growth forecast than a statement that the market expects roughly mid-cycle economics rather than a collapse. The price sits at a discount to book value of about $74 per share, the classic shape of a cyclical asset priced for an uncertain point in its cycle.

The disagreement among the methods is the real story, and it splits cleanly between the cycle-aware and the cycle-blind. The earnings-power lens reaches above the price, with Earnings Power Value near $98 on five-year-average normalized operating income, and the Graham Number near $83. So the question is not whether the price is below intrinsic value on demonstrated earnings power; on those lenses it is. The asset-value lens, by contrast, lands at or below the price once it accounts for the low return on equity: Residual Income near $34, Simple Excess Return near $46. The split is diagnostic. The methods that credit ArcelorMittal's normalized earnings power say cheap; the methods that penalize it for earning below its cost of capital say fairly valued. A buyer is choosing which of those views the cycle will vindicate.

The forward-growth methods sit close to the price, with the perpetual-growth DCF near $58 and the exit-multiple DCF near $70, neither stretched, which confirms this is not a premium-growth story. The most important non-method input is capital allocation: a 38% reduction in share count and a doubled dividend mean the company is converting cyclical cash flow into a shrinking share base, which raises per-share value even with flat earnings. Net debt of about $7.8 billion against interest coverage near nine times leaves ample room to keep doing it. The decisive variable is the cycle: whether the $131-per-tonne EBITDA and the European policy reset lift through-cycle returns above the cost of capital, the level at which the below-book discount would no longer be deserved.

Catalysts

The first-quarter 2026 results, reported April 30, were the key recent development and they leaned positive. ArcelorMittal posted net income of $575 million on sales of $15.5 billion, with operating income improving to $753 million on higher steel prices and better performance in North America and Europe. The metric management highlighted was EBITDA per tonne of $131, up $15 year over year and roughly 50% above historical averages, which it presented as evidence of structurally higher margins rather than a transient price spike.

European trade policy is the catalyst with the most leverage on the medium-term outlook. New measures including the carbon border adjustment mechanism and upcoming tariff-rate quotas are designed to reduce steel imports, lift domestic capacity utilization, and underpin investment in electric arc furnaces and mining expansion. If the import curbs hold, European profitability, long the weakest part of the footprint, could re-rate. Management also guided to second-quarter improvement and pointed to a pipeline of EBITDA gains through 2026.

The capital-return program remains the steady catalyst underneath the cyclical noise. The buyback has cut the share count by 38% and the dividend has doubled, with $0.7 billion returned to shareholders over the trailing twelve months. Analyst sentiment is cautious, with a recent Hold rating and a $60 price target near the current price, reflecting the standard tension in a cyclical: improving results against the ever-present risk that the cycle turns. The next quarterly print and the pace of the European import measures are what move the story from here.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• RIO (RIO TINTO PLC)
• FY2025 20-F: …and 3 world-class businesses driving our performance and growth: Aluminium & Lithium, Copper and Iron Ore. Aluminium & Lithium brings together businesses with extensive mining and downstream processing capabilities. It combines aluminium operations in the Pacific and Atlantic regions with lithium global operations…
• FY2025 20-F: …from contracts with customers, accounted for under IFRS 15 "Revenue from Contracts with Customers", and subsequent movements in provisionally priced receivables, accounted for under IFRS 9, and included in "Other revenue" above. (b) "Other products and freight services" includes metallic co-products, diamonds,…
• PKX (PKX)
• FY2025 20-F: …principal products produced by us and directly sold to external customers. See "Item 4. Information on the Company - Item 4.B. Business Overview - Steel Segment - Major Products." The average unit sales price calculation does not include sales results of steel products categorized as "others." 51 Table of Contents…
• FY2025 20-F: …services of POSCO FLOW. • Rechargeable Battery Materials Segment. Our Rechargeable Battery Materials Segment includes (i) the manufacturing and sale of various energy-related and other industrial materials by POSCO Future M, including cathode and anode materials for rechargeable batteries and (ii) investments made by…
• BHP (BHP GROUP LIMITED)
• FY2025 20-F: Allocation Framework Exceptional performance Operating excellence Enabled by BOS, operational excellence underpins strong returns and investment growth. FY2025 was a standout year for BHP, marked by record production, continued sector-leading margins and disciplined capital allocation. We are the world's lowest-cost…
• FY2025 20-F: …and Belarusian mines, and disruptions in Laos. In FY2026, we expect the potash market to come closer to balance as demand adjusts to current market conditions. In the medium term, potash demand is expected to continue to benefit from a rising and wealthier population and changing diets, while additional supply from…
• VALE (VALE)
• (no filing in the citation store)
• NUE (NUCOR CORPORATION)
• FY2025 10-K: …duration of current economic conditions or the magnitude or timing of changes in economic activity. Future economic downturns, prolonged slow growth or stagnation in the economy, a sector-specific slowdown in one of our key end-use markets, such as nonresidential construction, or changes in inflation could materially…
• FY2025 10-K: …and international providers offering similar products and services. We compete on price, service (e.g., consulting on engineering requirements, facilitating logistics, and timeliness of order fulfillment) and quality (e.g., reliably producing to exacting custom specifications). We believe we have established a…
• FCX (Freeport-McMoRan Inc.)
• FY2025 10-K: …of each business segment, commodity prices, costs and other factors. BUSINESS DIVISIONS AND SEGMENTS We have organized our mining operations into four primary divisions - U.S. copper mines, South America operations, Indonesia operations and Molybdenum mines. Refer to "Operations" below for discussion of our mining…
• FY2025 10-K: …a material adverse effect on our results of operations. Because we may rely on limited sources and long-lead times for consumables and components for key machines and equipment, a business interruption affecting or requiring such sources would exacerbate any negative consequences to us. Our business depends on timely…
• NEM (NEWMONT CORPORATION)
• FY2025 10-K: …operating results and financial condition. We rely on our supply chain operations to procure goods and services to support our operations and projects, and competition with other natural resource companies, and shortage of critical parts, services and equipment may adversely affect our operations and development…
• FY2025 10-K: …CODM primarily uses this metric to assess performance of the segment, plan and forecast future business operations, and benchmark to competitors. 150 Table of Contents NEWMONT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions, except per share, per ounce and per pound amounts) The financial…
• STLD (Steel Dynamics, Inc.)
• FY2025 10-K: …We compete in numerous industry sections, most significantly tied to the construction, automotive, and other manufacturing sectors. In many applications within these industry sections, steel competes with other materials, such as aluminum, cement, composites, plastics, carbon fiber, glass, and wood. Some of our…
• FY2025 10-K: …scrap, we compete with numerous independent recyclers, as well as smaller scrap companies engaged only in collecting obsolete scrap. In many cases, we also purchase unprocessed scrap metal from smaller scrap dealers and other processors. Successful procurement of materials is determined primarily by the price offered…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.