Assessing Ternium (NYSE:TX) Valuation After Strong 1 Year And 3 Month Shareholder Returns

What Ternium’s Recent Performance Tells You

Ternium (NYSE:TX) has been on investors’ radar after a 62% total return over the past year, paired with a 35% total return over the past 3 months, prompting a closer look at its fundamentals.

See our latest analysis for Ternium.

At a share price of US$43.52, Ternium’s recent 23% 3 month share price return sits within a much stronger 1 year total shareholder return of about 62%. This suggests momentum has been building over a longer stretch even as very short term moves have been more muted.

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With Ternium trading at US$43.52 against an analyst price target of about US$39.88, yet showing an estimated 45% intrinsic discount, the real question is whether there is still a buying opportunity here or if the market is already pricing in future growth.

Most Popular Narrative: 9.1% Overvalued

With Ternium last closing at $43.52 against a narrative fair value of about $39.88, the most followed view sees the shares trading a little ahead of its modelled worth based on projected earnings, margins and risk assumptions.

Capacity expansion and cost reduction programs position Ternium to capitalize on rising steel demand from nearshoring and infrastructure growth in Latin America.

Execution of a $300 million cost reduction program in 2025, achieved primarily through procurement initiatives, process optimization, production rebalancing, and energy efficiency (including wind power), is expected to lower per-ton production costs and meaningfully enhance net margins.

Read the complete narrative.

For readers interested in why this fair value still comes in below today’s price even with higher earnings and margin assumptions in play, an 8% required return used for discounting, and a richer future earnings multiple baked into the model, the full narrative joins these moving parts together in a way that raw numbers alone do not.

Result: Fair Value of $39.88 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still clear risks, including global steel overcapacity pressuring prices and Ternium’s heavy Latin American exposure, which leaves earnings sensitive to currency and political swings.

Find out about the key risks to this Ternium narrative.

Another View: Earnings Multiple Sends A Different Signal

While the narrative fair value of about $39.88 points to Ternium looking 9.1% overvalued, the earnings multiple tells a different story. At a P/E of 20.1x versus 24.8x for the US Metals and Mining industry and 44x for peers, and below a fair ratio of 25x, the share price screens as relatively low. So which set of assumptions do you trust more when you weigh the risk and potential upside?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If this mix of optimism and concern feels balanced to you, do not sit on the sidelines. Instead, weigh the trade off yourself using 4 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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