What happened

Brazilian steelmaker Companhia Siderurgica Nacional (NYSE:SID) stock lost 20% of its value in last month's sell-off, hurt by a shareholder dispute with management  and (probably) continued generally negative sentiment regarding South American stocks. This morning, however, shares of CSN are turning around, and trading up 13% as of 12:30 p.m. EDT.

For that, you can thank the friendly analysts at Credit Suisse, who just gave the company an upgrade.

Molten steel being poured at foundry

CSN stock is red hot today -- but should it be? Image source: Getty Images.

So what

Despite negative sentiment regarding Companhia Siderurgica Nacional stock, says Credit Suisse, the company's "business fundamentals remain intact and that global steel fundamentals are widely unchanged." Accordingly, Credit Suisse has decided to upgrade CSN stock to outperform in anticipation of a bounceback as investors' mood improves.

The analyst did not state a target price.

Now what

Sentiment notwithstanding, Companhia Siderurgica Nacional's business has been performing pretty well of late, with revenue rising substantially over the past two years, losses evaporating, and profits rolling in at a strong $423 million over the past 12 months, according to data from S&P Global Market Intelligence.

Based on those earnings, CSN stock currently sells for about 6.7 times trailing earnings. The company carries substantial debt, though, giving it an enterprise value of $9.8 billion once debt is factored in (market cap is only $2.8 billion). Thus, CSN's debt-adjusted P/E ratio is a much loftier 23 times earnings.

I don't mean to ruin today's party, but I have to say that given the debt load, I'm a lot less optimistic than Credit Suisse seems to be about this company's shares being undervalued.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.