Core Viewpoint - The current downturn in the steel industry presents a buying opportunity for companies in cyclical industries, but investors should focus on the strongest competitors, specifically Nucor and Steel Dynamics, rather than United States Steel [1]. Group 1: United States Steel - United States Steel has a historic reputation but is currently struggling, described as a "shell" of its former self, which has attracted acquisition interest from Nippon Steel [2]. - The company relies heavily on blast furnaces, an older and costly steelmaking technology, which is less efficient during periods of low demand and pricing [4]. - U.S. Steel is projected to lose at least $0.49 per share in Q1 2025, indicating significant financial challenges ahead [4][5]. - The business model of U.S. Steel is particularly vulnerable during the current industry downturn, making it a risky investment compared to its competitors [8]. Group 2: Competitors - Nucor and Steel Dynamics - Nucor and Steel Dynamics utilize electric arc mini-mills, which are more flexible and can adjust production based on demand, allowing them to maintain better profit margins [6]. - Despite the industry downturn, Nucor expects earnings between $0.45 and $0.55 per share, while Steel Dynamics projects earnings of $1.36 to $1.40 per share, indicating they will remain profitable [7]. - Both companies have seen significant stock price declines, with Nucor down 40% and Steel Dynamics down 20% from their 52-week highs, making them more attractively priced for potential investors [9].

United States Steel Today X United States Steel $41.52 -1.48 (-3.45%) 52-Week Range $26.92 ▼ $44.87 Dividend Yield 0.48% P/E Ratio 27.87 Price Target $41.32 Add to Watchlist The steel stocks in the basic materials sector have been benefactors of President Trump's steel and aluminum tariffs. However, U.S. Steel's 26.5% year-to-date (YTD) performance as of Mar 28, 2025, may be caused by more than just tariff benefits, especially when peers like Nucor Co. NYSE: NUE and Steel Dynamics Inc. NASDAQ: STLD are only ...

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Industry Overview - U.S. steel prices have surged over 25% this year, primarily due to a 25% tariff on all steel imports imposed by the Trump administration, which has restricted supply and allowed domestic mills to raise prices [1][3] - The tariffs have created a supply crunch in the domestic market, leading to increased demand for U.S. steel as foreign steel becomes more expensive [3] - Infrastructure spending and strong demand from the construction and automotive sectors have further supported the price rally, with hot-rolled coil (HRC) prices rising past $900 per short ton [4] Company Highlights Nucor Corporation (NUE) - Nucor has a diverse product portfolio and a strong presence in the construction and automotive sectors, maintaining profitability through operational efficiency and cost management [7] - The company is committed to boosting production capacity, which is expected to drive profitable growth and enhance its position as a low-cost producer [8] - Nucor's earnings have beaten the Zacks Consensus Estimate in three of the last four quarters, with a trailing four-quarter earnings surprise of approximately 27.2% [9] Steel Dynamics, Inc. (STLD) - Steel Dynamics is experiencing strong customer order activity for flat-rolled steel and is executing projects to increase capacity and profitability [10] - The company has consistently outperformed the Zacks Consensus Estimate in the last four quarters, with an average earnings surprise of about 3.6% [11] United States Steel Corporation (X) - U.S. Steel is focused on operational efficiency and cost management, particularly in its North American Flat-Rolled segment, and is executing its "Best for All" strategy [12] - The company has received positive customer feedback on the quality of products from its Big River 2 mill, which is expected to enhance its earnings as it approaches full operational capacity [12] - U.S. Steel's earnings have also beaten the Zacks Consensus Estimate in three of the last four quarters, with a trailing four-quarter earnings surprise of roughly 20.4% [13]

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Group 1: Financial Guidance and Performance - United States Steel Corporation (X) has provided guidance for adjusted earnings per share for Q1 2025, projecting a loss between 53 cents and 49 cents, with adjusted EBITDA expected to be around $125 million [1] - The company’s shares have gained 1.6% over the past year, contrasting with a 21.8% decline in the Zacks Steel Producers industry [3] Group 2: Segment Performance - The North American Flat-Rolled segment is performing well due to its commercial strategy and focus on operational efficiency and cost management [2] - The Mini Mill segment is anticipated to show sequential growth driven by increased volumes from Big River Steel (BRS) and Big River 2 (BR2) [2] - The Tubular segment continues to face challenges from a weak pricing environment, but there is optimism for future pricing improvements [2] Group 3: Product Quality and Future Outlook - Strong customer feedback has been received regarding the product quality of BR2 shipments, which is progressing towards full operational capacity and generating free cash flow this year [3] - BR2 is expected to be a key contributor to the company's 2025 EBITDA, with run-rate throughput anticipated in the second half of 2025 and full capability expected by 2026 [3] Group 4: Competitive Positioning - U.S. Steel currently holds a Zacks Rank 3 (Hold), while better-ranked stocks in the basic materials sector include Carpenter Technology Corporation (CRS), CSW Industrials Inc. (CSWI), and Axalta Coating Systems Ltd. (AXTA) [4] - Carpenter Technology has a Zacks Rank 2 (Buy) and has exceeded the Zacks Consensus Estimate in the last four quarters, with an average earnings surprise of 15.7% [4] - CSW Industrials has a current fiscal-year earnings estimate of $8.50 and has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings surprise of 10.1% [5] - Axalta Coating Systems, with a Zacks Rank 1, has consistently beaten consensus estimates, delivering an average earnings surprise of approximately 16.3% [6]

Group 1 - United States Steel Corp (X) has experienced an 8.35% gain over the past five days and formed a Golden Cross, indicating strong bullish momentum [1] - The stock is trading above its key moving averages, suggesting continued upside potential as traders monitor resistance levels [1][5] - JPMorgan analyst Bill Peterson maintains an Overweight rating on X stock with a price target of $43, citing Q1 EBITDA guidance of $125 million in line with estimates [2][3] Group 2 - Challenges for the company include lagged pricing impacts, weak European demand, and start-up costs for the BRS2 expansion [3] - The uncertainty surrounding the Nippon Steel Corp merger could create a dip-buying opportunity if regulatory setbacks occur, with valuation support above $40 per share [3] - Hedge fund manager Stanley Druckenmiller has increased his stake in US Steel by 143% last quarter, indicating strong confidence in the stock [4] Group 3 - The stock is currently trading at $41.06, significantly above its short-term moving averages, which are $39.51 (8-day SMA), $38.42 (20-day SMA), and $37.56 (50-day SMA) [5] - The 200-day SMA of $37.40 is also far behind, reinforcing the technical strength of the stock [5]

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Core Viewpoint - United States Steel is currently in a complex situation due to its agreement to be acquired by Nippon Steel for $55 per share, while trading around $38 per share, indicating potential upside for investors [2][3][4] Acquisition Situation - The acquisition by Nippon Steel has attracted interest from other potential buyers, including major domestic steel companies like Nucor and Cleveland-Cliffs, which could lead to a higher offer than $55 per share or a lower one depending on the outcome of the Nippon Steel deal [3][4] - The political implications surrounding the Nippon Steel acquisition create uncertainty about the deal's success, which could affect U.S. Steel's future [5][11] Business Model and Financial Performance - U.S. Steel primarily uses blast furnaces for steel production, a costly process that results in significant revenue and earnings volatility due to the cyclical nature of the steel industry [6][11] - The company is attempting to diversify by investing in electric arc mini-mills, which may stabilize financial performance, but it still faces challenges in competing with companies that exclusively use this technology [7][11] Investment Considerations - The current landscape suggests that U.S. Steel may not be an attractive standalone investment due to its outdated technology and lack of industry leadership, making it a less compelling option for most investors [10][11] - Despite the complexities, there remains a possibility of a sale even if the Nippon Steel deal fails, which could appeal to aggressive investors looking for special situation stocks [10][11]

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