United States Steel Corporation Stock Sell Recommendation Reiterated (X)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- United States Steel Corporation (NYSE: X) has been reiterated by TheStreet Ratings as a sell with a ratings score of D+ . The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

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Highlights from the ratings report include:
  • The debt-to-equity ratio of 1.13 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 0.89, which illustrates the inability to avoid short-term cash problems.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, UNITED STATES STEEL CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for UNITED STATES STEEL CORP is currently extremely low, coming in at 6.00%. Regardless of X's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, X's net profit margin of -1.11% significantly underperformed when compared to the industry average.
  • X has underperformed the S&P 500 Index, declining 15.83% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Despite the weak revenue results, X has outperformed against the industry average of 18.6%. Since the same quarter one year prior, revenues slightly dropped by 6.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

United States Steel Corporation engages in the production and sale of steel mill products in North America and Europe. The company operates in three segments: Flat-rolled Products (Flat-rolled), U. S. Steel Europe (USSE), and Tubular Products (Tubular). United States has a market cap of $3.3 billion and is part of the basic materials sector and metals & mining industry. Shares are down 4.2% year to date as of the close of trading on Thursday.

You can view the full United States Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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