Last Friday, Jan. 3rd, Robert Mcdonald, Board Director at United States Steel Corporation (NYSE:X) started a position in the company’s stock. Through four different transactions, he procured a total of 2,000 shares of the company. He paid $29.838 for the first 100 shares, $29.8378 for each of the following 200, and $29.8365 each, for an extra 800 shares. In addition, he got 1,000 shares of Common Stock under the terms of the company’s Non-Employee Director Stock Plan.
United States Steel Corporation (NYSE:X) is an integrated steel producer with operations in North America and Europe. It specializes in flat-rolled and tubular products. The company also engages in other businesses like real estate and transportation services (railroad and barge operations). Although its market capitalization reaches roughly $4.3 billion, it hasn´t generated positive earnings in more than 3 years. This makes assessing its valuation quite more complicated.
The stock looks quite reasonably valued at 0.2 times its sales (versus an industry average of 0.5x). However, it seems highly overvalued in relation to its book values. At 2.4x P/B, it trades at 3 times its peers´ mean.
The outlook for the general steel industry looks complicated in the U.S. Nonetheless, analysts expect United States Steel Corporation (NYSE:X) to outperform its competitors over the long-term. Consensus estimates point towards average annual EPS growth rates around 23% for the company over the next five years, compared to an industry mean of 7%-10%. So one could understand why Mcdonald is betting on the company now, despite its valuation. Furthermore, the stock pays a dividend yield of 5 cents per share, making you wait a little bit more worthwhile.
In addition to Mcdonald, more than 40 major hedge funds are placing their bets on United States Steel Corporation (NYSE:X). For instance, Andrew Feldstein and Stephen Siderow´s Blue Mountain Capital own more than 60 million shares, after upping its stakes by more than 11% not-long-ago. Ken Griffin´s Citadel Investment Group also increased its position in the company lately, by 69%. The fund now owns about 3.8 million shares. In addition, six major funds including Oz Management and Oaktree Capital Management hold bonds worth several million dollars.
Disclosure: Javier Hasse holds no position in any stocks mentioned