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United States Steel Corporation (X)

NYSE - Nasdaq Real Time Price. Currency in USD
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24.30-0.10 (-0.41%)
At close: 04:00PM EDT
24.39 +0.09 (+0.37%)
After hours: 07:59PM EDT
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  • T
    Tim
    I've discussed the very low p/b of us steel relative to other US steel makers. Normally most investors don't even look at book value and instead focus on earnings. Also for cyclical stocks, it's not a good idea to invest on a down cycle. But what happened in the last year is unlike any up cycle. At the end of 2020, US steel shareholder equity was at $3.786bln. It increased to $9.01bln at the end of 2021, a 1 year gain of $5.2bln. It further increased to $9.698bln at the end of q1 2022. So, in 5 quarters it gained almost $6bln or 156%. That's shareholder gap gain. Now other companies trade at half book but they did not gain 156% within the last year. The current market cap is $6.36bln. Now some will argue the company shareholder equity of $3.786bln is worthless but the company had already purchased 49.9% of Big River steel in 2019 for $700mln and it has the iron ore mining assets in it which should be significantly undervalued in the books. So at the current price market price, you are basically paying for the shareholder equity gains the last year for about $400mln but remember they are about to make $1bln this quarter. That's not EBITDA but adjusted earnings so essentially by end of Q2 at the current price, you are just paying for the equivalent of equity gains in the last 6 quarters AND a bonus of $600mln. So theres a huge difference when comparing X book over some other banks book value or even MTs book. So currently it trades at .65 to equity (composed mostly of earnings in the last year and undervalued mining and Big River Steel assets) with another $1bln profit coming in this QUARTER. Will have a separate post on Big River and earnings going forward. But this is the reason the company should buy back as much as they can at these levels. Out of the $800mln in the buyback plan, they spent $150mln in Q4 and $121 in Q1 so they still have $579mln. At the earnings update they had gone over the $300mln so they still have around 500mln as of the earnings cc. So this drop definitely is a bright spot from that standpoint. Looking for them to buy at least $300mln in Q2 and announce more buybacks at the cc or the next guidance announcement next month. If the price goes even lower so much the better from a buyback standpoint and diluted shares will go down even more.
  • b
    barbara B
    For all you price to book hounds we can point to the surge
    in equity all day but the book also goes up as the price of the stock declines. So when equity is increasing we get a big boost in P/b so it can Actually on price to price basis be a sign.of .management hording cash. and right now to show how this stacks up to peers .Would you rather have one share of NUE or four shares of X .With one share of NUE you'll get 27 bucks in earnings with four shares of X you'll get 44 bucks of earnings.
  • T
    Tim
    For an earnings estimate, I will start with a diluted share count at the end of Q3 of 287.4 mln shares. Let's say it moved up due to share price increase and issuance to 290mln shares. They have spent $271mln and let's say they bought $300mln this quarter as they will be more aggressive so let's say they buy 10 million shares at $30 ave so diluted shares should be around 270mln shares but let's say 275mln shares and give us some buffer. At $1bln in net earnings based on just beating last year's Q2, eps will be $3.63 compared to Q1s $3.05 and estimate of $3.27. I think that is conservative. For book value, let's say they spend $300mln in buying back 10mln shares this Q2 and say shareholder equity increases to $10.4bln factoring the buyback driving down basic share count to 255mln shares will lead to a book value of $40.78. It could easily be over $41 depending on how many shares they bought and what the starting count for q2. This is the reason I am still advocating a share buyback at these prices.
  • J
    Jack
    My rant for today. Why does CNBC spend so much coverage on companies with inferior earnings while totally ignoring the obvious stellar performance and investment profile of the steel industry.
  • M
    Mark
    A stronger dividend yield will result in a better price per share. Suggestion to management...Substantially increase the dividend payout. Doing this immediately is the right thing to do.
  • m
    mark
    If nue wanted a return on their cash they could?ve bought 45% of x, cash, book, cash flow, Europe, big River billions in ebitda etc for the same price they paid for the garage door/ door #$%$ company at 13x ebitda . Makes no sense
  • T
    Tim
    There was some concern on the diluted share count when X reported earnings in q1. The number of diluted shares went up even though the company has bought about $271mln worth of shares the last two quarters. So what happened? Well, basic shares in each quarter represent the average number of shares at the beginning and end of the quarter. Diluted shares include any options that can be exercised (in the money) so diluted will be more than basic. In the last 3 qtrs, the diluted shares in thousands have been 287,463; 285,321; and 293,267 so it actually went up by almost 6million shares. This happened because the share price at the end of each quarter was $21.97, $23.81 and $37.74. yup it just so happened that March 31 was one of the closing highs so a lot of options were in the money. Now, the basic number of shares have gone down from 270,175 to 268,995 to 261,453. So, its down by 8.5mln. it's probably down even more since an average was taken and since they bought $271mln they probably got 10mln share or more give or take. In any case, the market value is not based on diluted shares of course so an aggressive buyback this quarter could retire another 10million shares and diluted shares will drastically go down as well. So, if you are worried the price will go down more, it's possible BUT not very likey as they will have massive earnings this year and still very good earnings next year.
  • C
    Clancy
    Kris jon and Kathy sold X in mid $27 what is he doing here?
    if X is the only stock you have to diversify.
    I own 16 quality stocks all but KHC were down along with market.
    it is not sector or performance selling, it is panic selling.
    Seat tight like me and collect dividend from X, XOM, KHC, AAPL ,GE and few others until 2025 and be happy.
  • C
    Cassedy
    Guys, check out (http://Achieverspot.tech). They have been crushing it lately while X barley does anything at all.
  • b
    ben dover
    Back to teens?
  • C
    Clancy
    KHC pays $1.50 dividend and market likes it just like commercial "Mickey Likes it ".
    Agree with Mark higher dividend attracts investors.
  • T
    Tim
    Regarding US steel iron ore assets, stelco signed an 8 year deal to buy iron ore pellets on May 1 2020 and paid $100mln to acquire 25% of Minntac mine for $500mln. Now when they aquired the option and signed the agreement, iron ore was trading at about $83 per ton. It hit a low of $38 in 2015 and was on a steady rise to $120s before covid but stelco did this deal after covid was known and it rallied to $219 in July 2021 when steel was very high. It then went down to $94 in Nov 2021 but then the Russia invasion cause a spike to $160..The china slowdown brought it down a bit but still trading at $144.9 today (up$2). So this is a potential asset sale of $500mln if exercised and it's only 25% of one mine. They still have 1 other fully owned mine and a 14.7% stake with cliff in another mine. So definitely a huge asset if it is monetized. At $500mln valuation for the 25% stake or $125mln per mln ton capacity, that would value their entire holdings of 23.3 ton capacity at $2.9bln. So this is definitely something to keep an eye on as iron ore prices worldwide will stay high and even go higher once china starts ramping up their economy.
  • m
    mark
    Why does no one mention that slightly rising rates and rapidly falling stock prices is already leading to slow employment growth plans and layoffs, lower car sales and home prices,, the wealth effect alone will slow consumer spending , the market will accomplish slowing growth and lower inflation.
  • H
    Hrk
    Even with X down, not many shares trading. Whats that tell you about future price?
  • S
    Sandwich
    At the current market cap, X will once again have about 50% of the cap in cash by the end of this quarter. This is assuming a slightly larger cash build than Q1. Debt maturities are extremely favorable, so I see X moving higher in the near term. The problem with book value is the potential for inventory write downs, but I still believe the cash position will be the driver here.
  • C
    Cornerlot
    And this is what we get when CEO announces that X will have a record Q2..
  • B
    Brad
    Ever since that good earnings report with great guidance the criminal HF have brought this down.
  • C
    Charles M
    "Gundlach: We're starting to see the real reasons to believe that... maybe not here in 2022, but in 2023, we may see a real recession because let's think about it Charles, home prices.

    Home price affordability has decreased very markedly in the past two years. Home prices are up 30% broadly in the United States for the past two years and mortgage rates on the 30-year fixed mortgage have doubled.

    What that means is that the monthly payment for the same house from two years ago is now double. We also, you mentioned that things look pretty good in the aftermath of the money spray in response to the pandemic.

    But you know a lot of that was consumption brought forward. One of my favorite charts is to look at the trend of personal consumption expenditures from durables, non-durables, and services.

    For five years or four years going into the lock down prior to the pandemic all three of those series were rising very gradually and consistently, and at the same pace, and then when all the money spray happened we saw this explosion in durables, where it got 30% above trend, and we saw an explosion in non durable consumer spending, 20% now above the trend of that four-year period of stability and gradual price increases, or rather consumption spending increases.

    What that means is we have to revert back down to trend. When you buy durables, when you buy a used car, when you buy an appliance, a refrigerator, it's a durable and that means that you buy it very infrequently.

    Those accelerated sales, we have to pay back for them. So when you put together the draw that we're going to have from this spending [inaudible] brought forward, now we're paying the price for.

    For home price affordability being so bad and sentiment having collapsed, in the University of Michigan survey, there's good reason to believe that we have a payback coming for having plugged the hole back in 2020 and 2021" .......
  • T
    Tim
    Estimates are up again. 2022 and 2023 estimates are up to $11.05 and $4.11 respectively. Book value increase should mirror the earnings so book will be close to $50 by the end of 2023. Mini mill 2 and other investments should start paying off by then so p/b will have to go up. Maybe not to the 2.5mulitple of Nucor but even at 1 should be a $50 stock.
  • m
    mark
    Kkr can take the 3 bil they got for selling the garage door company to Nucor and buy all of us steel using the 2.9 bil x has on their balance sheet plus a few extra bucks in exchange for many billions in annual ebitda .