Here's Why You Should Hold Onto ArcelorMittal Stock for Now

ArcelorMittal MT has been benefiting from capacity expansion, higher-value-added and lower-carbon steel investments, stronger cash generation, shareholder returns and strategic growth projects across Europe, the United States and Liberia. However, weak Chinese steel demand, elevated exports, high capital spending, rising net debt and continued investment requirements could weigh on steel prices, margins, free cash flow and near-term financial flexibility. 

The company’s shares have gained 122.9% over a year compared with the industry’s 70.8% rise.

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Let’s find out why MT stock is worth retaining at the moment. 

ArcelorMittal Expands Capacity to Support Long-Term Growth

The company continues to expand its steelmaking capacity while increasing its focus on higher-value-added and lower-carbon steel products. ArcelorMittal is advancing strategic projects across Europe, including a new 1.1-Mt EAF at Gijón, a 0.8-Mtpa capacity expansion at Sestao and a new 2-Mtpa EAF at Dunkirk. The company is also strengthening its electrical steel and downstream capabilities, including non-grain-oriented electrical steel (NOES) projects in Europe and the United States, to address growing demand for specialized steel products and support long-term growth. 

ArcelorMittal continues to advance its growth investments, including the development of a NOES facility in Alabama. This new plant aims to meet the rising demand for high-quality electrical steel while supporting manufacturers with a reliable domestic supply and addressing supply chain challenges. As part of this initiative, the ArcelorMittal Calvert plant will include an annealing and pickling line, reversing cold mill and annealing and varnishing line, with capacity of up to 150,000 tons per year and completion targeted for the second half of 2027. 

The company is also progressing with the Liberia iron ore expansion, which is being commissioned toward a 20-million-ton annual capacity. In addition, ArcelorMittal is advancing studies for a potential second 1.5-million-ton EAF at Calvert, which could expand domestic steelmaking capacity and strengthen its position in the U.S. market. 

ArcelorMittal Enhances Returns Amid Stronger Cash Generation

ArcelorMittal remains committed to enhancing shareholder value through dividends and share buybacks. During the first half of 2026, the company returned $0.7 billion to shareholders, comprising $0.2 billion in dividends and $0.5 billion through share repurchases.  

The company has reduced its fully diluted share count by 38% since September 2020 through ongoing buybacks. Its 2026 capital return policy includes a quarterly base dividend of 15 cents per share, with 50% of post-dividend free cash flow allocated to share buybacks. ArcelorMittal expects shareholder returns in 2026 to exceed the policy minimum, supported by its expected stronger cash generation in the second half of the year. 

ArcelorMittal generated roughly $1 billion of operating cash flow in the second quarter of 2026, benefiting from improved operating performance and a lower working-capital investment compared with the first quarter. EBITDA increased 22.9% sequentially to $2.1 billion, supported by improved performance across all steel segments and positive price-cost effects. The company continues to invest heavily in growth projects, including high-value and lower-carbon steel initiatives, which are expected to strengthen its earnings potential over the long term.

China Demand Weakness and High Capex Weigh on MT

Weak steel demand in China remains a significant concern for the global steel industry. The slowdown in the real estate sector in China, as seen in falling home sales, is a significant contributor to this trend. Sluggish demand can leave excess steel available for export, intensifying competition in international markets and putting pressure on steel prices and margins.  

China’s large production base and persistent supply-demand imbalance could continue to weigh on global market conditions, making it difficult for steelmakers to sustain stronger pricing and profitability. For ArcelorMittal, prolonged weakness in Chinese demand and elevated exports pose a key downside risk to its steel margins and earnings outlook.

ArcelorMittal continues to maintain elevated capital spending, with 2026 capex guidance unchanged at $4.5-$5 billion. Ongoing investments include the Calvert NOES project, Liberia and Las Truchas mining projects, renewable energy projects in India and other capacity-expansion initiatives. The heavy investment program has already weighed on near-term cash generation. Sustained high capex could continue to constrain free cash flow and limit financial flexibility in the near term.

The company’s net debt was around $9.5 billion at the end of the second quarter of 2026, up from $9.3 billion at the end of the prior quarter, mainly due to higher working capital requirements and continued spending on growth projects. The increase in debt levels may limit near-term financial flexibility and weigh on free cash flow generation.

ArcelorMittal Price and Consensus

ArcelorMittal price-consensus-chart | ArcelorMittal Quote

MT’s Zacks Rank & Key Picks

MT currently carries a Zacks Rank #3 (Hold). 

Some better-ranked stocks in the Basic Materials space are Materion Corporation MTRN, L.B. Foster Company FSTR and Avient Corporation AVNT. MTRN sports a Zacks Rank #1, while FSTR and AVNT carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Materion’s current-year earnings stands at $6.81 per share, implying a 25.2% year-over-year increase. MTRN’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 6.6%.

The consensus estimate for L.B. Foster’s current-year earnings is pegged at $1.62 per share, implying a 134.8% year-over-year increase. FSTR’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, with the average surprise being 19.9%.

The Zacks Consensus Estimate for Avients’ current-year earnings is pegged at $3.20 per share, indicating a 13.5% year-over-year increase. AVNT’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 3.4%.

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This article originally published on Zacks Investment Research (zacks.com).

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