Ternium: Odd Choice Of Dividends When The Company Is Selling For 50% Book Value

Summary

• We initiate coverage on Ternium S.A. with a Sell, given the company's refusal to buy back its undervalued shares.
• The company's dividend is unsustainable and speculative given its low profits, further eroding value instead of supporting growth or buybacks, in my opinion.
• Political uncertainty, especially the US steel tariffs impacting Mexico, threatens Ternium's core business and adds to downside risk.
• Our price target of $18 per share is based on a near 70% discount to book value due to an uncertain future, poor capital allocation, and low confidence.

Lim Weixiang - Zeitgeist Photos

We initiate coverage of Ternium S.A. (NYSE:TX) with a Sell rating and an $18 price target. Ternium S.A. is a steel and mining company. They operate mainly in Mexico, Brazil, and Argentina, where they are involved in manufacturing, mining, and distributing steel

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.