Why We’re Revising Our Price Estimate For U.S. Steel From $9 To $15

-12.13%
Downside
40.97
Market
36.00
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United States Steel

We are raising our price estimate for U.S. Steel by 69%, which is primarily driven by three factors. The prospects of the U.S. Flat-rolled division (which accounts for around 70% of the company’s revenue) have improved as a result of the imposition of anti-dumping duties on Chinese steel imports into the U.S., resulting in a 25% increase in the division’s valuation vis-a-vis our previous estimate. The success of the company’s cost reduction initiatives have propped up the margins of the company’s European Flat-rolled & Tubular division, prompting us to revise upwards the division’s margin forecasts, boosting its valuation by 38%. Lastly, a reduction in the company’s net debt has also boosted our estimate of U.S. Steel’s stock price, as illustrated below:

Change in Valuation 3

Change in Valuation 5

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Have more questions about U.S. Steel? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for U.S. Steel

 

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