U.S. Steel (X, Financial) stock experienced a notable decline of 6.76%, attributed to President Donald J. Trump's remarks regarding a potential acquisition by Japan's Nippon Steel. The uncertainty surrounding this acquisition has unsettled investors.
For over a year, Nippon Steel has been interested in acquiring U.S. Steel. However, President Trump has voiced opposition to this sale, stating, "We don't want to see it go to Japan," despite maintaining a positive relationship with Japan, emphasizing that "we love Japan" and "we're working with them." This has cast doubts about the future of the deal among investors.
Currently, Nippon Steel's offer is valued at $14 billion, considerably above U.S. Steel's market capitalization of $9.5 billion. If this acquisition were to proceed, it could potentially offer shareholders an approximate 50% gain. Conversely, if the merger is blocked, U.S. Steel stands to benefit from existing tariffs on imported steel, which could allow for an increase in prices and profits.
From a financial standpoint, U.S. Steel (X, Financial) shows a price-to-earnings (P/E) ratio of 28.25, which is near its five-year high. The company's Price-to-Book (P/B) ratio is 0.84, also close to its one-year high. Despite these high valuation metrics, the company's Altman Z-Score of 2.15 indicates it's under some financial stress, hovering in the 'grey' area. This implies potential financial vulnerability, but not to the level of immediate bankruptcy risk. The GF Value indicates the stock is significantly overvalued compared to its intrinsic value. For more details on GF Value, you can check here.
In terms of growth, U.S. Steel faces challenges with a decline in revenue per share over the past three years. The company's revenue growth rate of -12.9% over the last year further highlights ongoing struggles. Despite these hurdles, the stock's price is close to a ten-year high, presenting a mixed outlook for investors.
