Ternium Stock is Making Moves in the Long Term

Ternium stock is up by 45% in 2021

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Ternium S.A. (NYSE:TX) is Latin America’s leading steel producer and manufacturer of flat and long steel products with operating facilities in Mexico, Brazil, Argentina, Colombia, the southern U.S., and Central America. Ternium offers a broad range of high value-added steel products for customers active in the automotive, home appliances, HVAC, construction, capital goods, container, food and energy industries.

Ternium stock has more than doubled year-over-year, and grown 45% year-to-date. The security also has a forward dividend of $2.10 and a dividend yield of 4.90%. This afternoon, TX is up 1.9% at $43.42, and earlier hit a more than decade-high of $43.73.

In terms of analyst outlook, those covering the equity looked split heading into today's trading. Specifically, three of the five covering brokerage firms sport a tepid "hold" recommendation, with not a "sell" or worse in sight.

Ternium has had a lights out performance in the earnings arena, outperforming expectations on all four of its most recent quarterly earnings reports released. For Q2 of 2020, estimates were beat by a margin of $0.22 and an EPS of $0.22 was reported. For Q3 of 2020, Ternium's EPS increased to $0.74 and beat expectations by a margin of $0.48. For Q4 of 2020, TX had another increase in earnings, rising to $2.11 per share and beating estimates by a margin of $1.09. For Q1 of 2021, Ternium reported an EPS of $3.07 and beat expectations by a margin of $0.62. Analysts expect that TX will report an EPS of $3.29 for Q2 of 2021 earnings.

From a fundamental perspective, Ternium stock may be an excellent value investment for the next one to two years and a great long-term dividend play. TX trades at an extremely low price-earnings ratio of 6.01 and has an even lower forward price-earnings ratio of 4.62, despite having grown massively in price over the past year. Ternium also has a manageable balance sheet with $1.47 billion in cash and $1.99 billion in debt.

However, Ternium has struggled to maintain consistent revenue and net income growth in the long-term. For example, in fiscal 2019 TX experienced an 11% decline in revenues. Overall, Ternium stock remains one of the best dividend and value stocks in the market today in terms of return potential.

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