US Steel's Stock Price Still Down Despite Rebound

Callen Whiteley

Hot

3 mins

Oct 07, 2022 09:27

Despite a slight rebound in recent months, the stock price of United States Steel Corporation is still down 15% from the beginning of the year and 45% from its peak in March 2022.

The shares of United States Steel Corporation (NYSE: X) have declined by about 15% year-to-date and remain down by over 45% from their March 2022 highs. While the company’s financial performance over the first half of 2022 has actually been pretty strong, with US Steel revenue and operating profits growing by 32% and 62% year-over-year respectively over the first six months of the year, driven by a surge in steel prices following the Russian invasion of Ukraine, there are multiple factors clouding the outlook for the industry. The U.S. Federal Reserve and other major central banks have been hiking interest rates at an aggressive pace to combat inflation. Late last month, the U.S. central bank raised its benchmark rates yet again by 0.75%, taking the Federal Funds rate to over 3%, from just about 0.25% at the beginning of this year. Higher interest rates are widely expected to result in a hard landing for the U.S. economy, leading to lower demand from key steel consumers such as the automotive and construction industry. There are also concerns about demand from China as its real estate market faces a big downturn. This could also have an impact on the global steel market as China is the world’s largest steel consumer.

Although we are reducing our price estimate for U.S. Steel stock to account for weakness in the steel markets, we still believe the company is reasonably well positioned to weather a potential downturn. U.S. Steel has less exposure to the European market than its rivals, and its manageable debt levels give it some flexibility even in the current rising interest rate environment.

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Looking at all of the Trefis Price Estimates is a great way to get a sense of where the market is currently valuing a particular stock. However, it's also important to keep in mind that these estimates are just that - estimates. The actual value of a stock can vary greatly from the estimates, so it's important to do your own research before making any investment decisions.