Algoma Steel Group Inc. (NASDAQ:ASTL) is one of the most promising penny stocks under $5. On July 31, RBC Capital lowered the firm's price target on Algoma Steel to C$8 from C$10, while maintaining a Sector Perform rating on the shares. Prior to this decision, the company released its Q2 2025 earnings.

Algoma Steel Group reported a net loss of $110.6 million, which was a sharp contrast to the net income of $6.1 million in the prior year's quarter. Adjusted EBITDA was a loss of $32.4 million, which reflected a negative margin of 5.5%. This was driven by a 10.5% year-over-year decline in steel revenue to $534 million, as well as lower steel shipments of 472,000 net tons, down 6.2% from the previous year.

A factory worker operating a machine that processes steel products.

The average net sales realization was $1,132 per ton, a decrease from $1,187 per ton in the prior year period, while the average cost per ton of steel products sold increased by 7% year-over-year to $1,144. A major factor contributing to the financial downturn was $64 million in direct tariff costs on outbound steel shipments to the US, which is a market now effectively closed to Canadian steel producers due to prohibitive tariffs. The company also reported ending the quarter with inventories valued at $736 million, a decrease from $800 million in the prior year quarter.

Algoma Steel Group Inc. (NASDAQ:ASTL) produces and sells steel products in Canada, the US, and internationally.

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Disclosure: None. This article is originally published at Insider Monkey.