Evraz (EVR) & Ferrexpo (FXPO): Should you hold these mining stocks?

Highlights

• The global stock markets are under pressure amid fear surrounding the Russia-Ukraine war.
• Many countries have issued a travel advisory and advised their citizens to leave Ukraine.

The global stock markets are under pressure amid fear surrounding the Russia-Ukraine war. The selloff was evident across countries, particularly those having a business operation linked to Russia and Ukraine markets. UK’s blue-chip FTSE 100 index has slipped below the 7,500 level.

The conflict between the two countries aggravated, with Russia deploying over 100,000 troops near the Ukraine border. Also, many countries issued a travel advisory and advised their citizens to leave Ukraine amid tension between the two countries.

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Let us look at FTSE listed companies and the severity of impact on these companies due to the Russia-Ukraine conflict:

Evraz Plc (LON: EVR)

The company is engaged in mining activities and the production of steel. It primarily operates in Russia and Ukraine. It offers various steel and value-added products to different industries. It is also engaged in the extraction of vanadium ore and the production of vanadium-related products.

The company’s stock is a constituent of the FTSE100 index. The company’s stock witnessed a massive decline today as it has major operations in the Siberia region of Ukraine. Investor fears that if Russia invades Ukraine, it might lead to a major disruption in business operations. Also, market participants are worried about possible sanctions that could be imposed on Russia, resulting in an adverse impact on the business of the company. The current negative sentiments around the stock price have nothing to do with the company’s overall business or financial performance; instead, it’s a pure reaction to the geopolitical tension.

Overall, the company reported solid business performance, which was in line with expectations. The rise in iron ore and other commodity prices in the international market has benefited the revenue and profitability. In the first half of 2021, the company reported a 24% rise in consolidated revenue at USD 6,178 million. In addition, the company has consistent dividend pay-out and superior dividend yield.

Evraz Plc currently trades at GBX 305.20, down by 34% on 14 February 2022 at 10:45 am GMT+1, with a market cap of £6,486 million. The current dividend yield of the stock stands at 10%.

Ferrexpo Plc (LON: FXPO)

FTSE250 listed company is one of the largest iron ore pellets producers in the world. Its operating base is in Ukraine. It has an iron ore production facility and three mines in the Horishni Plavni region of Central Ukraine.

The stock price witnessed a selloff amid fear of production disruption. Also, the company’s high-quality product is used by the global steel industry. Hence, any business disruption might impact other industry players as well.

The current selloff in stock is due to the negative sentiments and could be a short-term impact. However, the company has a solid fundamental and is poised to show significant growth in the long-term amid high demand for its products and positive trends in metal prices in international markets.

Ferrexpo Plc currently trades at GBX 268.40, down by 5.6% on 14 February 2022 at 10:45 am GMT+1, with a market cap of £1,672 million. The current dividend yield of the stock stands at 10.3%.

Please note, the above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.