We issued an updated research report on Companhia Siderurgica Nacional SID or CSN on Dec 21, 2015. The company specializes in producing hot and cold-rolled flat steel, galvanized sheets and tin plates for packaging, automotive and construction industries. This Brazilian steel manufacturer currently has a market capitalization of $1.3 billion.
The most striking feature of Companhia Siderurgica Nacional is its diversified business structure. In addition to its core steel business, the company has exposure in iron ore mining, logistics, cement and energy. Last quarter, the company sourced approximately 35% of its revenues from non-steel businesses. Also, the company constantly endeavors to improve its production capabilities and services, for which investments worth R$21.3 billion have been planned for 2014−2019.
We believe these positives will help Companhia Siderurgica Nacional, amid a spurt in domestic steel demand led by huge investments for development of ports, railroads, airports, wind farms and roads.
Notwithstanding these positives, Companhia Siderurgica Nacional’s exposure to headwinds arising from high debt levels, growing competition and foreign currency fluctuations might prove detrimental to its profitability in the near term. At the same time, we anticipate uncertain global economic conditions as well as weak segmental results to impact CSN’s businesses in the quarters ahead.
Companhia Siderurgica Nacional currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include Rayonier Advanced Materials Inc. RYAM, Grupo Simec S.A.B. de C.V. SIM and Koninklijke DSM N.V. RDSMY. While Rayonier Advanced Materials sports a Zacks Rank #1 (Strong Buy), both Grupo Simec and Koninklijke DSM carry a Zacks Rank #2 (Buy).
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