X - Embedded Expectations Analysis - 2019 05 22
United States Steel Corp. (X:USA) is currently trading at valuations well belowUAFRS-based (Uniform) Assets, with a 0.3x Uniform P/B, implying bearish expectations for the firm. Moreover, management has concerns about their cost leadership position, ability to finance the Mon Valley project, and competitive pressures.
Specifically, management may be exaggerating the progress of infrastructure projects, the strength of their steel mill footprint, and their cost leadership position. Moreover, they may lack confidence in their ability to achieve leverage targets, maintain market share, and finance the Mon Valley project through high yield and vendor-supported financing. Furthermore, they may be concerned about competitive pressures, the progress of multinational trade agreements and tariff negotiations, and their ability to identify attractive investment opportunities in the future. Also, management may be exaggerating their liquidity, integrated steelmaking capabilities, and ability to maintain EBITDA .
United States Steel is a steel producer of flat-rolled and tubular products with production operations in the United States and Europe. The company is also engaged in railroad services and real estate operations. The company's segments are: North American Flat-Rolled, which produces slabs, strip mill plates, sheets and tin mill products; U. S. Steel Europe, which produces and sells slabs, strip mill plate, sheet, tin mill products and spiral welded pipe, as well as heating radiators and refractory ceramic materials; and Tubular Products, which produces and sells electric resistance welded steel casing and tubing (known as oil country tubular goods), and standard and line pipe and mechanical tubing.
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