The stock was trading for more than 600p at the beginning of January. But the price sank to roughly 300p in the middle of February as tensions between the countries grew. Then, when Russia finally invaded Ukraine two weeks ago, the share price plummeted to around 50p.

Currently trading at around 80p (down more than 80% since the start of the year), is this mining giant too cheap to ignore?

Toxic association

Lots of shares are struggling right now. But it seems to me that Evraz’s stock is under extraordinary pressure. This could be because Roman Abramovich, the company’s major shareholder, is believed to be a close friend of Vladimir Putin. 

Russia also accounted for $5.5bn of the group’s total $14.1bn in revenues last year. It has a strong presence in the country and, like many steel companies, buys large quantities of raw materials there. Therefore, sanctions will hit Evraz disproportionately hard.

Even if the situation in Eastern Europe improves tomorrow, I doubt Evraz’s stock price will recover to its earlier heights. The war has damaged Russia’s image and many businesses may think twice before investing in the country again.

It’s not all bad news

Evraz is confronted with enormous obstacles, but there are some pieces of good news. For one, Evraz does not only operate in Russia. As previously stated, the area accounts for just around a third of the company’s sales. Asia, America, Africa, and Europe are home to the rest of the company’s businesses.

As far as we know, these enterprises are still operational and may be producing windfall profits as supply restrictions push up steel prices. This is something that investors should think about while evaluating a company. The corporation will have worth as long as these divisions continue to generate revenue for the group. But, because the situation is always changing, it is hard for me to quantify the worth of these procedures.

Share price outlook

In light of the events in Ukraine, I believe Evraz’s stock price will remain volatile for the foreseeable future. Companies with exposure to Eastern Europe are likely to stay unpopular with investors until we have more information on how the situation in the area will be resolved.

Nonetheless, if a solution to the crisis is found, the stock might skyrocket. If the uncertainty goes away, the company may be undervalued at its present levels.

Although the stock has potential in the best-case scenario, I will not add it to my portfolio. I believe there is now much too much uncertainty around the firm and the economy as a whole. I’m going to stay away from Evraz till things calm down.

The post Is the Evraz share price too cheap for me to ignore? appeared first on The Twelfth Magpie.

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James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Evraz shares are currently priced at just over 200p, which is a 60% decline over the past month. Due to this share price fall, the company now has a current dividend yield of over 30%. So, should I be buying this FTSE 100 stock?

Recent results

On Friday, the company released its full-year results, and they were extremely positive. In fact, in FY2021, revenues were able to reach over $14bn and net profits increased to over $3bn, in comparison to $858m in the previous year. This has equally allowed the company to reduce net debt to $2.6bn from $3.4bn the previous year. These results saw Evraz shares climb around 20% on the day.

Most importantly, the company has also declared an interim dividend of $0.50 per share, highlighting that it has confidence in the group’s financial position and outlook. This interim dividend alone, which will go ex on 11 March 2022, equates to a yield of 18%. This is already far higher than all FTSE 100 stocks, and it’s not even the full-year dividend. If the dividend can stay steady for the rest of the year, a dividend yield of well over 30% would be the result. This is almost unheard of.

Even so, this is a very big ‘if’. Indeed, Evraz has already warned shareholders that the impact of sanctions on Russia will disrupt the firm’s operations. War will exacerbate the situation further. As such, I highly doubt that the dividend will be able to remain at its current rates. There is even the possibility that it will be completely cut at some point.

Would I buy this FTSE 100 stock?

There are plenty of reasons to buy Evraz shares. For example, based on its recent results, the shares trade on a price-to-earnings ratio of under two. This indicates that the group is far too undervalued. Further, the upcoming dividend, which yields 18% on its own, is almost too tempting to ignore. Finally, with shareholders’ equity of over $2bn, it seems in a financially healthy position.

Yet, although I’m extremely tempted to buy, the current geopolitical tensions means that this stock is too risky for me at the moment. I feel that the company may be subject to several upcoming asset write-offs and large losses in the next few months, and this may strain the share price. As such, even despite the 20% dividend, I’m having to leave this FTSE 100 stock on the sidelines for now.

The post A 20% dividend yield! Is this FTSE 100 stock a no-brainer buy? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Stuart Blair has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.