$X,...U.S. Steel could climb another 50%, analyst says
U.S. Steel (X) has gained more than 50% during the past six months but Nomura’s Curt Woodworth and Alexander Burnes think it could gain another 50%.
U.S. Steel is at an annual EBITDA run-rate of $2B and EPS of $5.00, normalizing for a tax rate of 35% even though its recent tax rate has been well below this level; Nomura believes that with additional cost reduction efforts in 2015 coupled with accretive capital deployment into EAF and/or DRI, U.S. Steel should be able to achieve mid-cycle EPS near $6.00 in 2015.
Shares currently trade at a free cash flow yield of 13% estimated for 2015 and 11% for 2016, which the firm finds compelling.
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