Algoma Steel Group (NASDAQ:ASTL – Get Free Report) and Nippon Steel & Sumitomo Metal (OTCMKTS:NPSCY – Get Free Report) are both basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, earnings, profitability, institutional ownership, valuation and analyst recommendations.
Dividends
Algoma Steel Group pays an annual dividend of $0.20 per share and has a dividend yield of 4.3%. Nippon Steel & Sumitomo Metal pays an annual dividend of $0.25 per share and has a dividend yield of 3.7%. Algoma Steel Group pays out -9.0% of its earnings in the form of a dividend. Nippon Steel & Sumitomo Metal pays out -833.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Earnings & Valuation
This table compares Algoma Steel Group and Nippon Steel & Sumitomo Metal”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Algoma Steel Group | $2.07 billion | 0.24 | -$62.28 million | ($2.23) | -2.09 |
| Nippon Steel & Sumitomo Metal | $57.10 billion | 0.38 | $2.31 billion | ($0.03) | -226.00 |
Nippon Steel & Sumitomo Metal has higher revenue and earnings than Algoma Steel Group. Nippon Steel & Sumitomo Metal is trading at a lower price-to-earnings ratio than Algoma Steel Group, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of current recommendations and price targets for Algoma Steel Group and Nippon Steel & Sumitomo Metal, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Algoma Steel Group | 0 | 3 | 0 | 0 | 2.00 |
| Nippon Steel & Sumitomo Metal | 0 | 0 | 0 | 0 | 0.00 |
Insider & Institutional Ownership
72.0% of Algoma Steel Group shares are held by institutional investors. 7.8% of Algoma Steel Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Risk & Volatility
Algoma Steel Group has a beta of 1.62, suggesting that its stock price is 62% more volatile than the S&P 500. Comparatively, Nippon Steel & Sumitomo Metal has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500.
Profitability
This table compares Algoma Steel Group and Nippon Steel & Sumitomo Metal’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Algoma Steel Group | -13.51% | -22.24% | -10.20% |
| Nippon Steel & Sumitomo Metal | -0.42% | -0.61% | -0.30% |
Summary
Nippon Steel & Sumitomo Metal beats Algoma Steel Group on 8 of the 14 factors compared between the two stocks.
About Algoma Steel Group
Algoma Steel Group Inc. produces and sells steel products primarily in North America. The company provides flat/sheet steel products, including temper rolling, cold rolled, hot-rolled pickled and oiled products, floor plate, and cut-to-length products for the automotive industry, hollow structural product manufacturers, and the light manufacturing and transportation industries; and plate steel products that consist of rolled, hot-rolled, and heat-treated for use in the construction or manufacture of railcars, buildings, bridges, off-highway equipment, storage tanks, ships, and military applications. Algoma Steel Group Inc. was founded in 1901 and is headquartered in Sault Ste. Marie, Canada.
About Nippon Steel & Sumitomo Metal
Nippon Steel Corporation engages in steelmaking and steel fabrication, engineering and construction, chemicals and materials, and system solutions businesses in Japan and internationally. The company offers steel plates, sheets, and slags; bar and rod materials; structural steel; pipes and tubes; titanium and stainless products; and railway, automotive, and machinery parts for applications in automotive, energy, infrastructure, and consumer electronics markets. It is also involved in construction; waste processing and recycling; supplying electricity, gas, and heat; and the provision of coal-based chemical products, petrochemicals, electronic materials, materials and components for semiconductors and electronic parts, carbon fiber, and composite products. In addition, the company offers computer systems engineering and consulting, IT-enabled outsourcing, and other services. The company was formerly known as Nippon Steel & Sumitomo Metal Corporation and changed its name to Nippon Steel Corporation in April 2019. The company was incorporated in 1950 and is headquartered in Tokyo, Japan.
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