Analysis of Investment Comparison: Alcoa Corporation vs. Ternium S.A.

Key Facts and Data

Company Overview

• Ternium S.A.

  • Market Cap: $6.2 billion (as of March 21, 2025)
  • Stock Performance: +8.4% YTD, -22.24% annually
  • Revenue: $17.6 billion (trailing 12 months)
  • Net Profit Margin: -0.3%
  • Dividend Yield: 5.7%

• Alcoa Corporation

  • Market Cap: $8.8 billion (as of March 21, 2025)
  • Stock Performance: -9.9% YTD, +14.43% annually
  • Revenue: $11.9 billion (trailing 12 months)
  • Net Profit Margin: 0.5%
  • Dividend Yield: 1.2%

Financial Metrics

• Ternium S.A.

  • P/E Ratio: N/A
  • Year-over-Year Sales Growth: -21.4%

• Alcoa Corporation

  • P/E Ratio: 130.6
  • Year-over-Year Sales Growth: +34.3%

Stock Grades

• Quality Grade

  • Ternium S.A.: C (Score: 49)
  • Alcoa Corporation: D (Score: 34)

• Momentum Grade

  • Ternium S.A.: D (Score: 40)
  • Alcoa Corporation: C (Score: 52)

• Earnings Estimate Revisions

  • Ternium S.A.: Negative (Score: 24)
  • Alcoa Corporation: Negative (Score: 27)

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Market Trends and Business Impact

Industry Dynamics

• Both companies operate in the highly competitive Metals & Mining sector, exposed to global commodity price fluctuations and economic conditions.
• Ternium S.A. focuses on steel production and mining, while Alcoa specializes in aluminum production and energy generation.

Competitive Analysis

• Alcoa Corporation shows stronger revenue growth (+34.3% YoY) compared to Ternium S.A.'s (-21.4% YoY), indicating better operational efficiency or market demand for aluminum products.
• Alcoa’s higher market cap ($8.8 billion vs. $6.2 billion) suggests greater scale and potential for long-term growth.

Strategic Considerations

• Ternium S.A.’s higher dividend yield (5.7%) may appeal to income-focused investors, but its negative net profit margin (-0.3%) raises concerns about profitability.
• Alcoa’s higher P/E ratio (130.6) reflects investor expectations for future growth, despite its current premium valuation.

Long-Term Effects

• The metals and mining industry is likely to face ongoing challenges from regulatory changes, environmental pressures, and shifts in global supply chains. Both companies will need to adapt to these trends to maintain competitiveness.
• Alcoa’s diversified operations, including energy generation, may provide a buffer against volatility, while Ternium S.A.’s reliance on steel production makes it more vulnerable to cyclical downturns.

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Conclusion

Investment Implications

• Alcoa Corporation appears to be the stronger investment based on revenue growth, market cap, and momentum metrics, despite its high P/E ratio.
• Ternium S.A. offers a higher dividend yield but faces challenges with negative earnings revisions and weaker quality scores.

Portfolio Considerations

• Investors should consider their risk tolerance and financial goals when deciding between these two stocks. Alcoa’s growth potential may appeal to those seeking capital appreciation, while Ternium S.A.’s dividends could attract income-focused investors.

Final Recommendation

• Alcoa Corporation (AA) is the better investment choice based on current metrics, though both companies face significant risks in the volatile Metals & Mining sector.