Intrinsic value of United States Steel - X

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$30.42

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$30.42

 
Intrinsic value

$3.27

 
Up/down potential

-89%

 
Rating

str. sell

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of X stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 5.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -11.34
  3.00
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
Revenue, $m
  10,261
  10,569
  10,907
  11,276
  11,675
  12,106
  12,568
  13,063
  13,591
  14,153
  14,751
  15,386
  16,059
  16,771
  17,524
  18,321
  19,161
  20,048
  20,984
  21,970
  23,009
  24,104
  25,256
  26,469
  27,746
  29,089
  30,501
  31,987
  33,549
  35,191
  36,918
Variable operating expenses, $m
 
  11,700
  12,074
  12,482
  12,924
  13,401
  13,913
  14,460
  15,045
  15,668
  16,330
  17,033
  17,777
  18,566
  19,400
  20,281
  21,211
  22,193
  23,229
  24,321
  25,471
  26,683
  27,958
  29,301
  30,714
  32,201
  33,765
  35,409
  37,139
  38,957
  40,868
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  10,448
  11,700
  12,074
  12,482
  12,924
  13,401
  13,913
  14,460
  15,045
  15,668
  16,330
  17,033
  17,777
  18,566
  19,400
  20,281
  21,211
  22,193
  23,229
  24,321
  25,471
  26,683
  27,958
  29,301
  30,714
  32,201
  33,765
  35,409
  37,139
  38,957
  40,868
Operating income, $m
  -187
  -1,131
  -1,167
  -1,206
  -1,249
  -1,295
  -1,345
  -1,398
  -1,454
  -1,514
  -1,578
  -1,646
  -1,718
  -1,795
  -1,875
  -1,960
  -2,050
  -2,145
  -2,245
  -2,351
  -2,462
  -2,579
  -2,702
  -2,832
  -2,969
  -3,112
  -3,264
  -3,423
  -3,590
  -3,765
  -3,950
EBITDA, $m
  320
  -606
  -626
  -647
  -670
  -694
  -721
  -749
  -779
  -812
  -846
  -882
  -921
  -962
  -1,005
  -1,051
  -1,099
  -1,150
  -1,203
  -1,260
  -1,320
  -1,382
  -1,448
  -1,518
  -1,591
  -1,668
  -1,749
  -1,834
  -1,924
  -2,018
  -2,117
Interest expense (income), $m
  193
  188
  201
  215
  230
  247
  265
  285
  305
  328
  351
  376
  403
  431
  461
  493
  526
  561
  599
  638
  679
  723
  769
  817
  868
  922
  978
  1,037
  1,100
  1,165
  1,234
Earnings before tax, $m
  -416
  -1,319
  -1,368
  -1,421
  -1,480
  -1,542
  -1,610
  -1,682
  -1,760
  -1,842
  -1,930
  -2,023
  -2,121
  -2,226
  -2,336
  -2,453
  -2,576
  -2,706
  -2,844
  -2,989
  -3,141
  -3,302
  -3,471
  -3,649
  -3,837
  -4,034
  -4,242
  -4,460
  -4,689
  -4,931
  -5,184
Tax expense, $m
  24
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -440
  -1,319
  -1,368
  -1,421
  -1,480
  -1,542
  -1,610
  -1,682
  -1,760
  -1,842
  -1,930
  -2,023
  -2,121
  -2,226
  -2,336
  -2,453
  -2,576
  -2,706
  -2,844
  -2,989
  -3,141
  -3,302
  -3,471
  -3,649
  -3,837
  -4,034
  -4,242
  -4,460
  -4,689
  -4,931
  -5,184

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,515
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  9,160
  7,875
  8,127
  8,402
  8,700
  9,021
  9,365
  9,734
  10,127
  10,547
  10,992
  11,465
  11,966
  12,497
  13,058
  13,652
  14,278
  14,939
  15,636
  16,371
  17,145
  17,961
  18,820
  19,724
  20,675
  21,676
  22,728
  23,835
  24,999
  26,223
  27,509
Adjusted assets (=assets-cash), $m
  7,645
  7,875
  8,127
  8,402
  8,700
  9,021
  9,365
  9,734
  10,127
  10,547
  10,992
  11,465
  11,966
  12,497
  13,058
  13,652
  14,278
  14,939
  15,636
  16,371
  17,145
  17,961
  18,820
  19,724
  20,675
  21,676
  22,728
  23,835
  24,999
  26,223
  27,509
Revenue / Adjusted assets
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
  1.342
Average production assets, $m
  4,381
  4,513
  4,657
  4,815
  4,985
  5,169
  5,367
  5,578
  5,803
  6,044
  6,299
  6,570
  6,857
  7,161
  7,483
  7,823
  8,182
  8,561
  8,960
  9,381
  9,825
  10,292
  10,784
  11,302
  11,847
  12,421
  13,024
  13,658
  14,325
  15,027
  15,764
Working capital, $m
  2,025
  581
  600
  620
  642
  666
  691
  718
  748
  778
  811
  846
  883
  922
  964
  1,008
  1,054
  1,103
  1,154
  1,208
  1,265
  1,326
  1,389
  1,456
  1,526
  1,600
  1,678
  1,759
  1,845
  1,936
  2,030
Total debt, $m
  3,031
  3,186
  3,411
  3,657
  3,923
  4,209
  4,517
  4,847
  5,199
  5,574
  5,972
  6,395
  6,843
  7,317
  7,819
  8,350
  8,910
  9,500
  10,124
  10,781
  11,473
  12,202
  12,970
  13,778
  14,628
  15,523
  16,464
  17,454
  18,494
  19,588
  20,738
Total liabilities, $m
  6,886
  7,041
  7,266
  7,512
  7,778
  8,064
  8,372
  8,702
  9,054
  9,429
  9,827
  10,250
  10,698
  11,172
  11,674
  12,205
  12,765
  13,355
  13,979
  14,636
  15,328
  16,057
  16,825
  17,633
  18,483
  19,378
  20,319
  21,309
  22,349
  23,443
  24,593
Total equity, $m
  2,274
  835
  862
  891
  922
  956
  993
  1,032
  1,074
  1,118
  1,165
  1,215
  1,268
  1,325
  1,384
  1,447
  1,513
  1,584
  1,657
  1,735
  1,817
  1,904
  1,995
  2,091
  2,192
  2,298
  2,409
  2,527
  2,650
  2,780
  2,916
Total liabilities and equity, $m
  9,160
  7,876
  8,128
  8,403
  8,700
  9,020
  9,365
  9,734
  10,128
  10,547
  10,992
  11,465
  11,966
  12,497
  13,058
  13,652
  14,278
  14,939
  15,636
  16,371
  17,145
  17,961
  18,820
  19,724
  20,675
  21,676
  22,728
  23,836
  24,999
  26,223
  27,509
Debt-to-equity ratio
  1.333
  3.820
  3.960
  4.110
  4.250
  4.400
  4.550
  4.700
  4.840
  4.990
  5.130
  5.260
  5.390
  5.520
  5.650
  5.770
  5.890
  6.000
  6.110
  6.210
  6.310
  6.410
  6.500
  6.590
  6.670
  6.760
  6.830
  6.910
  6.980
  7.050
  7.110
Adjusted equity ratio
  0.099
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -440
  -1,319
  -1,368
  -1,421
  -1,480
  -1,542
  -1,610
  -1,682
  -1,760
  -1,842
  -1,930
  -2,023
  -2,121
  -2,226
  -2,336
  -2,453
  -2,576
  -2,706
  -2,844
  -2,989
  -3,141
  -3,302
  -3,471
  -3,649
  -3,837
  -4,034
  -4,242
  -4,460
  -4,689
  -4,931
  -5,184
Depreciation, amort., depletion, $m
  507
  525
  542
  560
  580
  601
  624
  649
  675
  703
  732
  764
  797
  833
  870
  910
  951
  995
  1,042
  1,091
  1,142
  1,197
  1,254
  1,314
  1,378
  1,444
  1,514
  1,588
  1,666
  1,747
  1,833
Funds from operations, $m
  1,366
  -794
  -826
  -862
  -900
  -941
  -986
  -1,034
  -1,085
  -1,139
  -1,197
  -1,259
  -1,324
  -1,393
  -1,466
  -1,543
  -1,625
  -1,711
  -1,802
  -1,898
  -1,999
  -2,105
  -2,217
  -2,335
  -2,459
  -2,590
  -2,727
  -2,872
  -3,024
  -3,183
  -3,351
Change in working capital, $m
  639
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
  90
  95
Cash from operations, $m
  727
  -1,037
  -845
  -882
  -922
  -965
  -1,011
  -1,061
  -1,114
  -1,170
  -1,230
  -1,294
  -1,361
  -1,432
  -1,507
  -1,587
  -1,671
  -1,760
  -1,853
  -1,952
  -2,056
  -2,165
  -2,281
  -2,402
  -2,529
  -2,664
  -2,805
  -2,953
  -3,109
  -3,274
  -3,446
Maintenance CAPEX, $m
  0
  -509
  -525
  -542
  -560
  -580
  -601
  -624
  -649
  -675
  -703
  -732
  -764
  -797
  -833
  -870
  -910
  -951
  -995
  -1,042
  -1,091
  -1,142
  -1,197
  -1,254
  -1,314
  -1,378
  -1,444
  -1,514
  -1,588
  -1,666
  -1,747
New CAPEX, $m
  -306
  -132
  -144
  -157
  -171
  -184
  -197
  -211
  -226
  -240
  -255
  -271
  -287
  -304
  -322
  -340
  -359
  -379
  -399
  -421
  -444
  -467
  -492
  -518
  -545
  -573
  -603
  -634
  -667
  -701
  -737
Cash from investing activities, $m
  -318
  -641
  -669
  -699
  -731
  -764
  -798
  -835
  -875
  -915
  -958
  -1,003
  -1,051
  -1,101
  -1,155
  -1,210
  -1,269
  -1,330
  -1,394
  -1,463
  -1,535
  -1,609
  -1,689
  -1,772
  -1,859
  -1,951
  -2,047
  -2,148
  -2,255
  -2,367
  -2,484
Free cash flow, $m
  409
  -1,679
  -1,514
  -1,581
  -1,652
  -1,729
  -1,810
  -1,896
  -1,988
  -2,085
  -2,188
  -2,297
  -2,412
  -2,534
  -2,662
  -2,797
  -2,940
  -3,090
  -3,248
  -3,415
  -3,590
  -3,775
  -3,969
  -4,174
  -4,389
  -4,615
  -4,852
  -5,102
  -5,365
  -5,641
  -5,931
Issuance/(repayment) of debt, $m
  -112
  205
  225
  246
  266
  287
  308
  330
  352
  375
  398
  423
  448
  474
  502
  530
  560
  591
  623
  657
  692
  729
  768
  808
  850
  895
  941
  990
  1,041
  1,094
  1,150
Issuance/(repurchase) of shares, $m
  517
  35
  1,315
  1,364
  1,418
  1,476
  1,538
  1,606
  1,678
  1,755
  1,837
  1,924
  2,017
  2,115
  2,219
  2,330
  2,446
  2,569
  2,699
  2,836
  2,980
  3,132
  3,293
  3,461
  3,639
  3,826
  4,023
  4,230
  4,447
  4,676
  4,917
Cash from financing (excl. dividends), $m  
  390
  240
  1,540
  1,610
  1,684
  1,763
  1,846
  1,936
  2,030
  2,130
  2,235
  2,347
  2,465
  2,589
  2,721
  2,860
  3,006
  3,160
  3,322
  3,493
  3,672
  3,861
  4,061
  4,269
  4,489
  4,721
  4,964
  5,220
  5,488
  5,770
  6,067
Total cash flow (excl. dividends), $m
  791
  -1,474
  -1,289
  -1,335
  -1,386
  -1,442
  -1,502
  -1,567
  -1,636
  -1,710
  -1,790
  -1,874
  -1,964
  -2,059
  -2,160
  -2,267
  -2,380
  -2,499
  -2,625
  -2,758
  -2,898
  -3,046
  -3,202
  -3,366
  -3,538
  -3,720
  -3,911
  -4,112
  -4,324
  -4,547
  -4,781
Retained Cash Flow (-), $m
  162
  -26
  -27
  -29
  -32
  -34
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -60
  -63
  -66
  -70
  -74
  -78
  -82
  -86
  -91
  -96
  -101
  -106
  -112
  -117
  -123
  -130
  -136
Prev. year cash balance distribution, $m
 
  1,465
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Discount rate, %
 
  7.40
  7.77
  8.16
  8.57
  8.99
  9.44
  9.92
  10.41
  10.93
  11.48
  12.05
  12.66
  13.29
  13.95
  14.65
  15.38
  16.15
  16.96
  17.81
  18.70
  19.63
  20.62
  21.65
  22.73
  23.87
  25.06
  26.31
  27.63
  29.01
  30.46
PV of cash for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  98.2
  58.5
  34.8
  20.7
  12.2
  7.2
  4.3
  2.5
  1.5
  0.9
  0.5
  0.3
  0.2
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

United States Steel Corporation produces and sells flat-rolled and tubular steel products in North America and Europe. It operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE), and Tubular Products (Tubular). The Flat-Rolled segment offers slabs, rounds, strip mill plates, sheets, and tin mill products. This segment serves customers in the automotive, consumer and the combined industrial, service center, and mining commercial markets. The USSE segment provides slabs, sheets, strip mill plates, tin mill products, and spiral welded pipes, as well as heating radiators and refractory ceramic materials. This segment serves customers in the construction, service center, conversion, container, transportation, appliance and electrical, oil, gas, and petrochemical markets. The Tubular segment offers seamless and electric resistance welded steel casing and tubing; and standard and line pipe and mechanical tubing products primarily to customers in the oil, gas, and petrochemical markets. The company also provides railroad services; and owns, develops, and manages various real estate assets. United States Steel Corporation was founded in 1901 and is headquartered in Pittsburgh, Pennsylvania.

FINANCIAL RATIOS  of  United States Steel (X)

Valuation Ratios
P/E Ratio -12
Price to Sales 0.5
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 7.3
Price to Free Cash Flow 12.6
Growth Rates
Sales Growth Rate -11.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -38.8%
Cap. Spend. - 3 Yr. Gr. Rate -8.6%
Financial Strength
Quick Ratio 30
Current Ratio 0
LT Debt to Equity 131.1%
Total Debt to Equity 133.3%
Interest Coverage -1
Management Effectiveness
Return On Assets -2.6%
Ret/ On Assets - 3 Yr. Avg. -4.6%
Return On Total Capital -8.1%
Ret/ On T. Cap. - 3 Yr. Avg. -10.7%
Return On Equity -18.7%
Return On Equity - 3 Yr. Avg. -22.8%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 6.2%
Gross Margin - 3 Yr. Avg. 7.2%
EBITDA Margin 2.8%
EBITDA Margin - 3 Yr. Avg. 0.9%
Operating Margin -1.8%
Oper. Margin - 3 Yr. Avg. -3.4%
Pre-Tax Margin -4.1%
Pre-Tax Margin - 3 Yr. Avg. -5.2%
Net Profit Margin -4.3%
Net Profit Margin - 3 Yr. Avg. -6%
Effective Tax Rate -5.8%
Eff/ Tax Rate - 3 Yr. Avg. 7.2%
Payout Ratio -7%

X stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the X stock intrinsic value calculation we used $10261 million for the last fiscal year's total revenue generated by United States Steel. The default revenue input number comes from 2016 income statement of United States Steel. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our X stock valuation model: a) initial revenue growth rate of 3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.4%, whose default value for X is calculated based on our internal credit rating of United States Steel, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of United States Steel.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of X stock the variable cost ratio is equal to 110.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for X stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.3% for United States Steel.

Corporate tax rate of 27% is the nominal tax rate for United States Steel. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the X stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for X are equal to 42.7%.

Life of production assets of 8.6 years is the average useful life of capital assets used in United States Steel operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for X is equal to 5.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2274 million for United States Steel - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 173.913 million for United States Steel is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of United States Steel at the current share price and the inputted number of shares is $5.3 billion.


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COMPANY NEWS

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▶ [$$] U.S. Bid to Stem Steel Imports Faces Hurdles   [Apr-20-17 06:19PM  The Wall Street Journal]
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▶ Buy U.S. Steel for a Pullback Trade   [11:42AM  Investopedia]
▶ EPA: No significant chemical discharge from US Steel spill   [Apr-14-17 04:33PM  Associated Press]
▶ US Steel to restart plant following leak earlier in the week   [02:50PM  American City Business Journals]
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▶ Stocks Rebound; Nvidia, Other Chip Stocks Weaker   [Apr-10-17 01:36PM  Investor's Business Daily]
▶ [$$] U.S. Steelmakers Press Their Luck With Price Increases   [06:15AM  The Wall Street Journal]
▶ 'Trump Stocks' Charts Are Wilting   [Apr-08-17 02:00PM  TheStreet.com]
▶ [$$] Five Picks for Steel Protectionism   [Apr-07-17 03:22PM  Barrons.com]
▶ U.S. Steel: Look Out Below!   [Apr-05-17 03:52PM  Barrons.com]
▶ Steel Stocks Rise Amid Commerce Department's Dumping Findings   [Mar-30-17 04:22PM  Investor's Business Daily]
▶ Higher Oil Prices Bode Well for U.S. Steel   [12:35PM  TheStreet.com]
▶ U.S. Steel: Go Oil, Go!   [12:07PM  at Barrons.com]
Stock chart of X Financial statements of X
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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