United States Steel Corporation (X)

[tootalljones]

Cash flow will be even better than this article suggests. And indeed, this article suggests X will sell for 2022 will be a ridiculously just 2X FREE cash flow:https://seekingalpha.com/article/4493613-us-steel-stock-priced-at-2x-fcf-seems-cheap

In addition, the balance sheet will be pristine. Bullet proof. As of this very moment, the company is hovering around zero net debt, and each billion going forward will pose a real problem: what to do with the money? The shares are being dramatically repurchased by the company as well. It may have just 225 million shares by mid year, depending on the pace of buying. Expect a new buyback announcement at Q1 earnings.

anyway

here is why the free cash flow will even be better than 2X FCF:

2022 earnings are predicted to go down based on lowered steel prices but the windfall increase in steel prices is significant. As a comparison, here are the average steel prices X got in their flat roll segment from q1 to Q4 per net ton..$888, $1078, $1325, and a high of $1432. The $2bln EBITDA quarter occured in q3 as Q4 production volume was downnto seasonal maintenance and slow down. With hrc pricing now in the $1300 to $1500 level for the rest of the year, there is a good chance the company will exceed the $5.5bln in EBITDA earnings last quarter which would lead to $15/sh with no major adjustments. The other major factor in earnings is that European steel pricing shot up 50% in the last month. US steel europe accounts for about 25 to 28% of total tons shipped by the company. In 2021, the ave steel prices they got in Euros were 620, 750, 969, and 940. Currently, the amounts are 1140 for the later months to 1359 which are all higher than the highest ave price in any quarter last year. X made $975 mln in Europe all of last year. That may increase $500mln to $1bln just on pricing alone. If volumes increase materially which it should, the added profits may be over $1bln. This is another reason why X should outperform other steel companies.
Please also bear in mind that the company has ALREADY locked in almost 40% of 2022 pricing far far higher than current price of steel, something along the lines of $1,400 to as high as $1,700, perhaps even a little higher as these contracts were largely inked in the back half of 2021 when HRC surpassed 1900 dollars.