EVRAZ plc is a British multinational vertically integrated steel manufacturing and mining company with headquarters in London, England. It has operations mainly in Russia, but also in Ukraine, Kazakhstan, Italy, Czech Republic, the United States, Canada and South Africa. Because of their dealings in Russia and Ukraine, Evraz shares are down 84% in the last two months. What next for the company?

Sanctions

About 1/3 of the companies revenue is generated in Russia. With ongoing concerns about sanctions, the company has stated this morning that its operations have not yet been affected by these international sanctions on Russia. They acknowledged that the sanctions imposed are getting into the way of their functionings in terms of logistics, but confirmed that there isn’t any direct impact on their operations.

There are also concerns regarding their main shareholder, Roman Abramovich, who has been linked to Putin. This called into question the Russian influence that the company has. However, they commented saying that “the company does not consider itself to be an entity owned by, or acting on behalf or at the direction of, any persons connected with Russia.”

Oversold?

Evraz saw revenue grow to $14B in 2021, up from $9.7B in 2020. Even though Russia is the largest area for revenue, the company still has ongoing operations elsewhere. In fact, still 2/3 of their operations. This certainly supports an argument that the share price is currently undervalued.

There are still major concerns as to how things play out over the coming weeks. Further restrictions could continue to hinder the share price alongside any criticism the company may face regarding their shareholders.

On the other hand, if the uncertainty around the company’s future does diminish, Evraz shares could see a quick rise up.

Buy or Sell?

For me, there could be some short term upside for the price. But right now, I wouldn’t be looking for a long term position until there is more clarity.

AlphaPicks does not own shares in the above stocks. To buy crypto and shares, register here with our preferred partner, EToro.

Leave a Reply