Why Is U. S. Steel Stock Surging?

Core Insights - United States Steel Corporation (USS) has seen a stock increase of over 50% year-to-date, significantly outperforming the S&P 500 Index, which has declined by 1% [1] - The stock price surge is attributed to President Trump's support for a strategic collaboration with Japan's Nippon Steel, which is expected to enhance USS's market position [1][6] Financial Performance - USS reported a revenue increase of approximately 2.5%, rising from $3.64 billion in Q4 2024 to $3.73 billion in Q1 2025, despite continuing to report losses with earnings per share worsening to -$0.52 [3] - Revenue for Q1 2025 showed a 10.4% decrease year-over-year, with adjusted EBITDA reported at $172 million, down from $190 million in Q4 2024 [5] - The Flat-Rolled segment's adjusted EBITDA declined by 33% year-over-year due to lower average realized prices and increased energy costs [5] Market Position and Strategic Developments - The proposed $14.9 billion takeover is being reframed as a "planned partnership," allowing USS to maintain its headquarters in Pittsburgh while the U.S. government retains authority over the company [2] - Nippon Steel plans to invest up to $4 billion in a new steel mill, projected to create 70,000 jobs and contribute $14 billion to the U.S. economy within 14 months [2] Valuation Metrics - Despite negative revenue growth in recent years, USS's price-to-sales (P/S) multiple has increased from 0.4 in 2020 to 0.6 currently, although this is higher than the 0.3 seen at the end of 2021 and 2022 [4]