Time To Sell U.S. Steel Stock?
United States Steel (NYSE:X) stock looks very unattractive – making it a very bad pick to buy at its current price of around $42. We believe there are several major concerns with X stock, which makes it very unattractive given that its current valuation looks high.
We arrive at our conclusion by comparing the current valuation of X stock with its operating performance over the recent years as well as its current and historical financial condition. Our analysis of United States Steel along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a very weak operating performance and financial condition, as detailed below. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
Image by Bakhrom Tursunov from Pixabay
How does United States Steel’s valuation look vs. the S&P 500?
Going by what you pay per dollar of sales or profit, X stock looks slightly expensive compared to the broader market.
• United States Steel has a price-to-sales (P/S) ratio of 0.6 vs. a figure of 3.2 for the S&P 500
• Additionally, the company’s price-to-operating income (P/EBIT) ratio is 58.4 compared to 24.3 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 26.9 vs. the benchmark’s 24.3
How have United States Steel’s revenues grown over recent years?
United States Steel’s Revenues have fallen considerably over recent years.
• United States Steel has seen its top line decline at an average rate of 7.9% over the last 3 years (vs. increase of 6.3% for S&P 500)
• Its revenues have decreased 13.4% from $18 Bil to $16 Bil in the last 12 months (vs. growth of 5.2% for S&P 500)
• Also, its quarterly revenues reduced by 15.3% to $3.5 Bil in the most recent quarter from $4.1 Bil a year ago (vs. 5.0% improvement for S&P 500)
How profitable is United States Steel?
United States Steel’s profit margins are considerably worse than most companies in the Trefis coverage universe.
• United States Steel’s Operating Income over the last four quarters was $155 Mil, which represents a very poor Operating Margin of 1.0% (vs. 13.0% for S&P 500)
• United States Steel’s Operating Cash Flow (OCF) over this period was $919 Mil, pointing to a poor OCF-to-Sales Ratio of 5.9% (vs. 15.7% for S&P 500)
Does United States Steel look financially stable?
United States Steel’s balance sheet looks weak.
• United States Steel’s Debt figure was $4.3 Bil at the end of the most recent quarter, while its market capitalization is $9.5 Bil (as of 4/1/2025). This implies a poor Debt-to-Equity Ratio of 46.9% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $1.4 Bil of the $20 Bil in Total Assets for United States Steel. This yields a moderate Cash-to-Assets Ratio of 6.8% (vs. 14.8% for S&P 500)
How resilient is United States Steel stock during a downturn?
United States Steel stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on X stock? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
• United States Steel stock fell 55.7% from a high of $38.45 on 27 March 2022 to $17.02 on 5 July 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 13 December 2023
• Since then, the stock has increased to a high of $49.59 on 18 December 2023 and currently trades at around $42
Covid Pandemic (2020)
• United States Steel stock fell 48.0% from a high of $9.43 on 23 February 2020 to $4.90 on 18 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 5 June 2020
Global Financial Crisis (2008)
• United States Steel stock fell 91.2% from a high of $191.96 on 25 June 2008 to $16.88 on 2 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
Putting all the pieces together: What it means for United States Steel stock
In summary, United States Steel’s performance across the parameters detailed above are as follows:
• Growth: Extremely Weak
• Profitability: Extremely Weak
• Financial Stability: Weak
• Downturn Resilience: Very Weak
• Overall: Very Weak
In addition, keeping in mind its high valuation, we think that the stock is very unattractive, which supports our conclusion that United States Steel is a very bad stock to buy.
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