Ternium (NYSE:TX) Margin Compression In Q3 EPS Of US$0.10 Tests Bullish Narratives

Ternium (NYSE:TX) has posted fresh FY 2025 numbers, with third quarter revenue of US$3.95b, basic EPS of US$0.10 and net income of US$20.6m, setting the tone for what has been an uneven year of reported profits. Over recent periods, revenue has moved in a tight band around US$3.9b to US$4.5b per quarter. In contrast, basic EPS has swung from a loss of US$3.71 in the second quarter of 2024, to a gain of US$1.43 in the fourth quarter of 2024, and US$1.10 in the second quarter of 2025. This leaves investors focused on how durable current margins really are.

See our full analysis for Ternium.

With the latest results on the table, the next step is to set these earnings and margin patterns against the prevailing market narratives around Ternium to see which stories still hold up and which ones the numbers call into question.

See what the community is saying about Ternium

Margins Look Thin Despite US$15.7b TTM Revenue

• Over the last four reported quarters, Ternium generated about US$15.7b in revenue and US$583.9m in net income, which works out to a 3.7% net margin compared with 0.4% a year earlier according to the analysis data.
• Supporters of the bullish view see that 3.7% net margin as a starting point, not a destination, and expect higher profitability as new, higher value steel capacity ramps up.
  • The bullish narrative talks about low emission and higher grade automotive steels helping margins. The recent quarterly revenue band of roughly US$3.9b to US$4.5b per quarter shows the top line has been relatively steady as these projects build out.
  • At the same time, the five year earnings trend in the analysis shows an average annual decline of 44.1%, so the current margin level still has to prove it is durable enough to support the stronger long term earnings story that bulls are using.

If you want to see how supporters think these operating trends tie into a long term upside case for the business, you can review the full bull argument at 🐂 Ternium Bull Case

P/E Of 14.7x And DCF Fair Value Of US$87.84

• The stock trades on a P/E of 14.7x, below the 25.2x P/E for the US Metals & Mining industry and the 38.7x peer average in the data, and the provided DCF fair value of US$87.84 is roughly double the current share price of US$43.64.
• Analysts with a more cautious, bearish view question whether that apparent value gap can be relied on when recent results include a very large one off gain.
  • The risks and rewards summary notes a US$401.9m one off gain in the last 12 months, which means part of the reported profit that feeds into the P/E and DCF work is not from ongoing operations.
  • Those same cautious voices expect earnings to grow about 5.9% per year, which is positive but not high growth, so they may argue that a lower multiple than industry peers is reasonable until profitability feels less dependent on special items.

6.19% Dividend Yield And One Off Gain In The Mix

• The analysis flags a 6.19% dividend yield, but also notes that this payout is not well covered by either earnings or free cash flow, and that the last year included a US$401.9m one off gain that lifts reported results.
• Critics in the bearish camp focus on that combination of a high dividend and a big one off, and they question how comfortably the company can fund distributions once those temporary gains drop out.
  • The trailing 12 month net margin of 3.7% and net income of US$583.9m are measured after including the one off, so bears see a risk that underlying profitability is weaker than the headline margin suggests.
  • Against that, consensus in the analysis still points to forecast earnings growth of about 5.94% per year, so the debate is whether that growth is enough to keep the dividend level if future years do not benefit from similar special gains.

If you are trying to weigh that income story against the more cautious outlook on cash coverage, you can read the full bear case laid out by skeptics at 🐻 Ternium Bear Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Ternium on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

With bulls and bears both making strong points, it is worth looking at the numbers yourself and deciding where you stand. If you want a clear view of what the current data says about both sides of the story, take a closer look at the 4 key rewards and 2 important warning signs.

See What Else Is Out There

Ternium’s thin 3.7% net margin, reliance on a US$401.9m one off gain and dividends not well covered by earnings all raise durability questions.

If those cash flow and payout concerns have you wanting something sturdier, check out our solid balance sheet and fundamentals stocks screener (43 results) to quickly spot companies where underlying financial strength is front and center.

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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