| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 43.05 | 3 |
| Intrinsic value (DCF) | 11.97 | -71 |
| Graham-Dodd Method | 9.73 | -77 |
| Graham Formula | n/a |
Ternium S.A. (NYSE: TX) is a leading steel manufacturer operating across Latin America and the U.S., specializing in high-value steel products for construction, automotive, and industrial sectors. Headquartered in Luxembourg, Ternium operates through its Steel and Mining segments, producing slabs, hot-rolled coils, galvanized products, and iron ore. With a vertically integrated supply chain, the company serves key industries such as construction, automotive, and energy, leveraging its extensive distribution network across Mexico, Argentina, Brazil, and the U.S. Despite cyclical steel market challenges, Ternium maintains a strong regional presence, supported by its parent company, Techint Holdings. The company’s diversified product portfolio and focus on operational efficiency position it as a critical player in Latin America’s steel industry.
Ternium presents a mixed investment case due to its exposure to volatile steel prices and regional economic conditions. While its diversified product mix and vertical integration provide cost advantages, recent financials show a net loss ($53.7M in FY 2023) and negative EPS (-$2.70), reflecting margin pressures. The dividend yield (~5.3%) is attractive but may be unsustainable if earnings remain weak. Positives include strong operating cash flow ($1.91B) and a manageable debt-to-equity ratio. Investors should weigh its cyclical risks against its dominant market share in Latin America and potential recovery in steel demand.
Ternium’s competitive advantage lies in its regional dominance in Latin America, particularly in Mexico and Argentina, where it benefits from integrated operations and proximity to key markets. Unlike global competitors, Ternium focuses on high-margin value-added products (e.g., automotive-grade steel), reducing commoditization risks. Its Mining segment provides partial raw material self-sufficiency, mitigating input cost volatility. However, the company faces stiff competition from larger global players like ArcelorMittal and Nucor, which have superior scale and diversification. Ternium’s reliance on Latin American economies also exposes it to currency and political risks absent for U.S.-based rivals. While its cost structure is competitive regionally, it lacks the technological edge of specialized steelmakers like SSAB or POSCO. Strategic partnerships with automakers and construction firms bolster its positioning, but pricing power remains tied to commodity cycles.