U.S. Steel (X) closed at $19.20 on November 3, 2016, rising 7.7% from its previous day’s closing. U.S. Steel has seen a mini-turnaround this year, with the stock rising ~140% YTD (year-to-date). Other steelmakers have also joined the party. ArcelorMittal (MT) and AK Steel (AKS) have risen 107% and 143%, respectively, since the beginning of the year.
However, even with the massive appreciation this year, U.S. Steel is trading at less than 10% of its 2008 highs. The company’s stock price has been in a downward spiral since the global financial crisis of 2008, after which time it posted a net profit only once in 2014. The company expects to post a net loss in 2016 as well.
U.S. Steel has an iconic past. When the company was founded in 1901, its authorized capital was $1.4 billion, making it the largest business enterprise ever launched. It was the first company globally to have a market capitalization in excess of $1 billion.
The company accounted for 67% of the total steel produced in the United States (SPY) in its first year of full operation, making it the largest steelmaker in the world. Now, U.S. Steel is nowhere near its iconic past. According to the World Steel Association, U.S. Steel was ranked 24th among global steelmakers based on 2015 tonnage. Nucor (NUE) was ranked 14th.
In this series, we’ll analyze how the outcome of the US elections could impact U.S. Steel. Specifically, we’ll discuss how the economic and foreign policies of Donald Trump and Hillary Clinton could impact U.S. Steel and other US-based steelmakers.
Let’s begin by looking at the two candidates’ positions on infrastructure spending.