What Is The Upside To U.S. Steel If Its Tubular Segment Reaches Its Historic Highs?
U.S. Steel‘s (NYSE:X) tubular segment has shown significant growth in 2017 with its revenue growing by 123% in the first 9 months compared to the same period last year. Recovery in global crude oil prices has supported the revival of the shipment volume and price realization of the company’s Tubular segment which, in turn, has resulted in higher revenue realization. With the Organization of the Petroleum Exporting Countries (OPEC)’s decision to keep their production cuts intact through 2018, we anticipate this division to show further recovery over our forecast horizon.
We have created an interactive model which summarizes the impact of a rise in the revenue of the Tubular segment of U.S. Steel on its share price. The U.S. oil rig count rose by 12 last week as per the latest data released by Baker Hugues, which is the biggest weekly increase since 2017. In such a scenario, it is possible that U.S. Steel’s tubular segment reaches its 2012 highs over the span of the next four years (including 2018). This would create a 7% upside to our current price estimate for U.S. Steel as elaborated below.
- Can U.S. Steel Stock Return To Pre-Inflation Shock Highs?
- What’s Happening With U.S. Steel Stock?
- Will U.S. Steel Stock Continue To Outperform Despite Economic Headwinds?
- Is U.S. Steel Set For Tough Q3 Results?
- Why We Are Cutting Our Price Estimate For U.S. Steel Stock
- How Will U.S. Steel Stock Fare In An Uncertain Economy?
You can view and modify our assumptions by using our interactive platform.
However, with an increase in the U.S. shale output, there is a greater possibility of oil being pushed down to its previous lows despite the effort of production cuts initiated by OPEC and its allies. U.S. crude production currently sits at 9.88 million barrels a day (BPD). This, in turn, would lead to a downside to the Tubular segment of U.S. Steel in contrast to our above scenario.
We have $38 price estimate for U.S. Steel which is 9% below the market.
Have more questions about U.S. Steel? See the links below.
- How Much Can a Positive Implication of Section 232 Impact U.S. Steel?
- How Has the Recovery in Oil Prices Benefited the Tubular Segment of U.S. Steel
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