NEW YORK (TheStreet) -- Shares of United States Steel Corp. (X) are down 5.83% to $30.23 as Brent crude oil fell more than $2 a barrel in Monday trading to a new five-year low, exposing a threat to the company's tubular products division, Axiom Capital analyst Gordon Johnson said.
"The last time oil prices were at the levels seen in today's trading session, U.S. Steel's tubular business saw a contraction in overall rig counts and began generating negative operating margins (i.e., 2009)," Johnson said, according to Barron's.
"While we are modeling U.S. Steel's Tubular operating margins at just under 10% in 2015, if we assume these margins go to zero, after-tax this represents about 80 cents per share in EPS downside. We believe this represents about $8 per share in downside from today's price, or -26% in value," he added.
Separately, TheStreet Ratings team rates UNITED STATES STEEL CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED STATES STEEL CORP (X) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, notable return on equity, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."