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TheStreet Open House

Why United States Steel (X) Stock Is Up Today

NEW YORK (TheStreet) -- United States Steel  (X) rose Wednesday after the company announced it would indefinitely idle two plants in Texas and Pennsylvania that make steel pipe and tube for the oil and gas industries.

The company cited illegally priced imports as the reason for the idling, which affects approximately 260 workers.

The closures require 60 days' notice under federal law and should occur in early August. This is around the time U.S. trade officials should make a final decision on whether to impose tariffs on steel from South Korea, whose steel exports to the U.S. increased 73% in the first four months of 2014 compared to the same period in 2013.

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U.S. trade officials made a preliminary decision in February that South Korea was not "dumping" steel, or selling it at unfair prices. The South Korean government announced it was happy with this decision and hoped the final ruling would follow suit. But the U.S. steel industry has since increased pressure to impose tariffs on steel it claims the South Korean government is subsidizing and selling at a 10% to 20% discount.

The stock was up 2.93% to $23.40 at 10:30 a.m.

Separately, TheStreet Ratings team rates UNITED STATES STEEL CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate UNITED STATES STEEL CORP (X) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 166.66% and other important driving factors, this stock has surged by 33.79% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although X had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Net operating cash flow has significantly increased by 144.63% to $570.00 million when compared to the same quarter last year. In addition, UNITED STATES STEEL CORP has also vastly surpassed the industry average cash flow growth rate of -27.39%.
  • UNITED STATES STEEL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UNITED STATES STEEL CORP reported poor results of -$11.68 versus -$0.97 in the prior year. This year, the market expects an improvement in earnings ($0.81 versus -$11.68).
  • The debt-to-equity ratio of 1.14 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, X maintains a poor quick ratio of 0.98, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, UNITED STATES STEEL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: X Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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