Value
10.0/10data confidence 20%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
- ▸Attractively valued
ASTL · Why this verdict
Why Algoma Steel Group (ASTL) is rated SELL
Updated
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VerdictSELL
Overall score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Algoma Steel is deeply cheap on price-to-sales in an out-of-favor sector, but it burns cash at -19% of revenue, has missed earnings in 3 of the last 4 quarters and has shrinking sales.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Algoma is cash-burning, with free cash flow at -19% of revenue and a weak Piotroski F-Score of 2/9, which pushes quality to 1.6 versus the 4.0 floor. Quality breakdown | Free cash flow margin improves toward breakeven over the next 12 months. | →Stable |
| CounterSteel is capital-intensive, and a recovery in volumes could swing cash flow quickly given the high operating leverage. | ||
The company missed earnings estimates in 3 of the last 4 quarters, with an average surprise of -31%. Earnings | EPS losses narrow and results meet or beat estimates. | ↑Improving |
| CounterThe latest quarter was a 55% beat with a loss of 0.36 per share versus 0.80 expected, which may mark an inflection. | ||
Quarterly revenue fell from $589.7M to $267.5M over five quarters, and the next quarter is estimated near $221.3M, so sales are still contracting. Revenue quarters | Quarterly revenue stabilizes above $250M. | ↑Improving |
| CounterRevenue figures are provisional from yfinance, and price or volume swings in steel can reverse quickly. | ||
Basic Materials is out of favor and the stock scores 10.0 on value, so cheapness is the main reason to own it. Edge rationale | Sector rotation into materials re-rates the shares. | →Stable |
| CounterValue confidence is just 0.2, and price-to-sales is a poor measure for a loss-making business. | ||
Algoma is cash-burning, with free cash flow at -19% of revenue and a weak Piotroski F-Score of 2/9, which pushes quality to 1.6 versus the 4.0 floor.
→StableQuality breakdown
- Expectation
- Free cash flow margin improves toward breakeven over the next 12 months.
CounterSteel is capital-intensive, and a recovery in volumes could swing cash flow quickly given the high operating leverage.
The company missed earnings estimates in 3 of the last 4 quarters, with an average surprise of -31%.
↑ImprovingEarnings
- Expectation
- EPS losses narrow and results meet or beat estimates.
CounterThe latest quarter was a 55% beat with a loss of 0.36 per share versus 0.80 expected, which may mark an inflection.
Quarterly revenue fell from $589.7M to $267.5M over five quarters, and the next quarter is estimated near $221.3M, so sales are still contracting.
↑ImprovingRevenue quarters
- Expectation
- Quarterly revenue stabilizes above $250M.
CounterRevenue figures are provisional from yfinance, and price or volume swings in steel can reverse quickly.
Basic Materials is out of favor and the stock scores 10.0 on value, so cheapness is the main reason to own it.
→StableEdge rationale
- Expectation
- Sector rotation into materials re-rates the shares.
CounterValue confidence is just 0.2, and price-to-sales is a poor measure for a loss-making business.
Per-dimension breakdown
Quality
1.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 8.5 |
| FCF quality | 0.0 |
| Moat | 2.5 |
| Piotroski F | 2.2 |
- ▸Cash-burning: FCF -19% of revenue
- ▸No competitive moat
- ▸Weak Piotroski F-Score: 2/9
- ▸Quality concerns
Growth
5.0/10data confidence 50%Momentum
2.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 3.6 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+0.5%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
5.3/10data confidence 67%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.6 |
| Analyst rating | 5.0 |
Insider
5.0/10data confidence 50%Peer rank
1.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.4 |
| quality rank | 0.0 |
| growth rank | 0.0 |
Technical
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.8 |
| support resistance | 7.4 |
| 52w position | 3.9 |
Risk (lower is worse)
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.1 |
| days to cover | 4.8 |
| volatility | 0.9 |
| put call | 8.3 |
| implied vol | 0.0 |
| beta | 4.5 |
| debt equity | 1.3 |
| news risk | 6.0 |
- ▸High IV: 86%
Catalyst
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 8.0 |
- ▸Earnings concerns: 1B/3M
- ▸Earnings in 7 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.3<4.5
- EARNINGS_PROXIMITY:7d<=7d
Warning (1)
- ASYMMETRY:UPSIDE_EXHAUSTED (upside=0.0%)
Reward-to-Risk
0.00
Upside
+0.0%
Downside
9.3%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeSector Rotation — Basic Materials sector out of favor, value=10.0
SuitabilityAggressive — Beta 1.65>1.3, MCap $0.4B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 2.3<4.5 outcome against Value at 10.0 and asymmetric R:R of 0.00.
The strongest dimensions are Value at 10.0, Technical at 6.4, and Sentiment at 5.3; the weakest are Peer rank at 1.6, Quality at 1.6, and Momentum at 2.3. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.00 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Cash Burning Operations
Trip ifFree cash flow margin rises above -5% of revenue from the current -19%.
- P2Repeated Earnings Misses
Trip ifEPS beats estimates in at least 2 consecutive quarters.
- P3Shrinking Revenue
Trip ifQuarterly revenue rises above $350M from the latest $267.5M.
- P4Out Of Favor Sector Value
Trip ifValue score falls below 6.0 from the current 10.0.