Looking for an ASX blue-chip share that could be a real steal deal?
Then you may wish to run your slide rule over S&P/ASX 200 Index (ASX: XJO) share BlueScope Steel Ltd (ASX: BSL). Apologies for the pun!
Shares in the manufacturer of painted and coated steel products have come under heavy selling pressure over the past five months amid the ongoing slowdown in China's steel-hungry residential and factory sectors.
On 10 April, the BlueScope Steel share price closed the day at $24.13. When the closing bell sounded on Friday, the ASX blue-chip share was trading for $20.06, down 16.8%.
Which could make now an opportune time to get in at potentially bargain-level prices.
Martin Conlon, head of Australian equities at Schroders, pointed to two reasons why BlueScope Steel could be a longer-term steal following the past months' selloff (courtesy of The Australian Financial Review).
First, Conlon noted that the company has managed to deliver value for shareholders through the ups and downs in steel market cycles.
Indeed, at its FY 2024 results announcement, BlueScope's board approved an extension of the share buyback program for up to $270 million to be bought over the next 12 months.
And on Friday, the ASX blue-chip share reported it had bought back 155,000 shares the previous day, bringing the total share repurchases to date to 64,376,391.
The second reason Conlon is optimistic about the outlook for BlueScope Steel is that China's steel mills will eventually have little choice but to pull back and cut the surplus supplies, which should create better market dynamics for the ASX 200 manufacturer.
Economists are also speculating that China's government will increase its stimulus efforts in the fourth quarter of 2024 to boost its sluggish housing and manufacturing industries.
What's been happening with the ASX blue-chip share?
BlueScope Steel reported its full-year results on 19 August.
Atop the ongoing share buyback mentioned above, the core financial metrics indicated a tough 12 months for the ASX blue-chip share.
BlueScope's reported net profit after tax (NPAT) of $806 million was down 20% from FY 2023. And underlying earnings before interest and tax (EBIT) of $1.34 billion declined by 17%.
But as with the share buyback, the board still rewarded shareholders with a final fully franked dividend of 30 cents per share, up 20% from the prior year's final dividend.
That brought the full year dividend payout to 55 cents per share. At Friday's closing price of $20.06, this sees the ASX blue-chip share trading on a fully franked dividend yield of 2.7%.
And in what could be a third reason to BlueScope Steel shares are a steal deal at current levels, the company said it intends to increase its annual dividend payout to target 60 cents per share.
