Evraz (LSE: EVR) shares have been suffering recently, as the crisis with Russia and Ukraine escalated to full-out war this week. This has led to several sanctions on the Russian government, and as the majority of the Evraz’s operations take place in Russia and Ukraine, this is likely to have an extremely detrimental effect on the miner. Further, the turmoil in the countries is also likely to disrupt mining activities
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.
Is this little-known company the next ‘Monster’ IPO?
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
Click here to see how you can get a copy of this report for yourself today
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.
