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U.S. Steel: Trump Effect Is Fine, What about Earnings?

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Trump effect

U.S. Steel Corporation (X) has been on a tear since Donald Trump was elected as the 45th US president. Other steelmakers (XME) including AK Steel (AKS), Nucor (NUE), and ArcelorMittal (MT) also joined the party. Metals and mining stocks staged a comeback due to expectations of a revival in US demand.

Steel was mentioned in several of Trump’s speeches before the presidential election. Trump’s stance on protecting US steelmakers from the onslaught of foreign-made steel caused several analysts to upgrade steel stocks after Trump’s election.

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Iconic corporation

U.S. Steel, the once iconic US enterprise, has had a nightmarish time since the global financial crisis of 2008. U.S. Steel’s market capitalization briefly fell below $1 billion this year. U.S. Steel was the first company globally to have a market capitalization in excess of $1 billion. When the company was founded in 1901, its authorized capital was $1.4 billion—the largest business enterprise ever launched.

Series overview

Trump’s presidency helped revive market sentiments. It also helped U.S. Steel’s upward price action. However, we should remember that in the medium to long term, earnings are a key driver of stock prices. Since 2008, U.S. Steel only posted a net profit in 2014. In this series, we’ll explore what factors could drive U.S. Steel’s earnings in the coming quarters. It could help us understand what could drive the company once the euphoria over Trump’s presidency dies down.

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