Intrinsic value of United States Steel - X

Previous Close

$25.09

  Intrinsic Value

$3.23

stock screener

  Rating & Target

str. sell

-87%

  Value-price divergence*

-30%

Previous close

$25.09

 
Intrinsic value

$3.23

 
Up/down potential

-87%

 
Rating

str. sell

 
Value-price divergence*

-30%

*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 4.4

 

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
  21.70
  20.03
  18.53
  17.17
  15.96
  14.86
  13.88
  12.99
  12.19
  11.47
  10.82
  10.24
  9.72
  9.24
  8.82
  8.44
  8.09
  7.79
  7.51
  7.26
  7.03
  6.83
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.79
Revenue, $m
  10,261
  12,488
  14,989
  17,766
  20,817
  24,139
  27,726
  31,573
  35,674
  40,022
  44,612
  49,441
  54,504
  59,800
  65,328
  71,090
  77,089
  83,329
  89,817
  96,559
  103,565
  110,846
  118,414
  126,282
  134,465
  142,979
  151,843
  161,073
  170,691
  180,717
  191,175
Variable operating expenses, $m
 
  13,824
  16,593
  19,667
  23,045
  26,722
  30,693
  34,951
  39,491
  44,304
  49,386
  54,731
  60,336
  66,198
  72,318
  78,697
  85,338
  92,246
  99,427
  106,891
  114,646
  122,706
  131,084
  139,794
  148,853
  158,278
  168,090
  178,308
  188,955
  200,054
  211,630
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
  13,824
  16,593
  19,667
  23,045
  26,722
  30,693
  34,951
  39,491
  44,304
  49,386
  54,731
  60,336
  66,198
  72,318
  78,697
  85,338
  92,246
  99,427
  106,891
  114,646
  122,706
  131,084
  139,794
  148,853
  158,278
  168,090
  178,308
  188,955
  200,054
  211,630
Operating income, $m
  -187
  -1,336
  -1,604
  -1,901
  -2,227
  -2,583
  -2,967
  -3,378
  -3,817
  -4,282
  -4,774
  -5,290
  -5,832
  -6,399
  -6,990
  -7,607
  -8,249
  -8,916
  -9,610
  -10,332
  -11,081
  -11,861
  -12,670
  -13,512
  -14,388
  -15,299
  -16,247
  -17,235
  -18,264
  -19,337
  -20,456
EBITDA, $m
  320
  -716
  -860
  -1,019
  -1,194
  -1,384
  -1,590
  -1,811
  -2,046
  -2,295
  -2,558
  -2,835
  -3,126
  -3,429
  -3,746
  -4,077
  -4,421
  -4,779
  -5,151
  -5,538
  -5,939
  -6,357
  -6,791
  -7,242
  -7,711
  -8,200
  -8,708
  -9,237
  -9,789
  -10,364
  -10,964
Interest expense (income), $m
  193
  188
  281
  386
  503
  631
  770
  921
  1,082
  1,254
  1,437
  1,629
  1,832
  2,045
  2,267
  2,499
  2,741
  2,992
  3,254
  3,527
  3,810
  4,104
  4,409
  4,727
  5,057
  5,400
  5,758
  6,130
  6,517
  6,921
  7,342
Earnings before tax, $m
  -416
  -1,524
  -1,885
  -2,287
  -2,730
  -3,214
  -3,737
  -4,299
  -4,899
  -5,537
  -6,210
  -6,920
  -7,664
  -8,443
  -9,257
  -10,106
  -10,989
  -11,909
  -12,865
  -13,858
  -14,891
  -15,964
  -17,079
  -18,239
  -19,445
  -20,699
  -22,005
  -23,365
  -24,781
  -26,258
  -27,797
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
  -1,524
  -1,885
  -2,287
  -2,730
  -3,214
  -3,737
  -4,299
  -4,899
  -5,537
  -6,210
  -6,920
  -7,664
  -8,443
  -9,257
  -10,106
  -10,989
  -11,909
  -12,865
  -13,858
  -14,891
  -15,964
  -17,079
  -18,239
  -19,445
  -20,699
  -22,005
  -23,365
  -24,781
  -26,258
  -27,797

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
  9,305
  11,169
  13,238
  15,512
  17,987
  20,660
  23,527
  26,583
  29,823
  33,243
  36,841
  40,614
  44,560
  48,680
  52,974
  57,444
  62,093
  66,927
  71,951
  77,172
  82,598
  88,237
  94,100
  100,197
  106,542
  113,147
  120,025
  127,191
  134,663
  142,455
Adjusted assets (=assets-cash), $m
  7,645
  9,305
  11,169
  13,238
  15,512
  17,987
  20,660
  23,527
  26,583
  29,823
  33,243
  36,841
  40,614
  44,560
  48,680
  52,974
  57,444
  62,093
  66,927
  71,951
  77,172
  82,598
  88,237
  94,100
  100,197
  106,542
  113,147
  120,025
  127,191
  134,663
  142,455
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
  5,332
  6,400
  7,586
  8,889
  10,307
  11,839
  13,482
  15,233
  17,089
  19,050
  21,111
  23,273
  25,535
  27,895
  30,356
  32,917
  35,582
  38,352
  41,231
  44,222
  47,331
  50,563
  53,922
  57,417
  61,052
  64,837
  68,778
  72,885
  77,166
  81,632
Working capital, $m
  2,025
  687
  824
  977
  1,145
  1,328
  1,525
  1,737
  1,962
  2,201
  2,454
  2,719
  2,998
  3,289
  3,593
  3,910
  4,240
  4,583
  4,940
  5,311
  5,696
  6,097
  6,513
  6,946
  7,396
  7,864
  8,351
  8,859
  9,388
  9,939
  10,515
Total debt, $m
  3,031
  4,464
  6,130
  7,980
  10,013
  12,226
  14,615
  17,178
  19,910
  22,806
  25,864
  29,081
  32,454
  35,982
  39,665
  43,503
  47,500
  51,657
  55,978
  60,470
  65,137
  69,987
  75,029
  80,270
  85,722
  91,394
  97,298
  103,447
  109,854
  116,533
  123,500
Total liabilities, $m
  6,886
  8,319
  9,985
  11,835
  13,868
  16,081
  18,470
  21,033
  23,765
  26,661
  29,719
  32,936
  36,309
  39,837
  43,520
  47,358
  51,355
  55,512
  59,833
  64,325
  68,992
  73,842
  78,884
  84,125
  89,577
  95,249
  101,153
  107,302
  113,709
  120,388
  127,355
Total equity, $m
  2,274
  986
  1,184
  1,403
  1,644
  1,907
  2,190
  2,494
  2,818
  3,161
  3,524
  3,905
  4,305
  4,723
  5,160
  5,615
  6,089
  6,582
  7,094
  7,627
  8,180
  8,755
  9,353
  9,975
  10,621
  11,293
  11,994
  12,723
  13,482
  14,274
  15,100
Total liabilities and equity, $m
  9,160
  9,305
  11,169
  13,238
  15,512
  17,988
  20,660
  23,527
  26,583
  29,822
  33,243
  36,841
  40,614
  44,560
  48,680
  52,973
  57,444
  62,094
  66,927
  71,952
  77,172
  82,597
  88,237
  94,100
  100,198
  106,542
  113,147
  120,025
  127,191
  134,662
  142,455
Debt-to-equity ratio
  1.333
  4.530
  5.180
  5.690
  6.090
  6.410
  6.670
  6.890
  7.070
  7.210
  7.340
  7.450
  7.540
  7.620
  7.690
  7.750
  7.800
  7.850
  7.890
  7.930
  7.960
  7.990
  8.020
  8.050
  8.070
  8.090
  8.110
  8.130
  8.150
  8.160
  8.180
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
  -1,524
  -1,885
  -2,287
  -2,730
  -3,214
  -3,737
  -4,299
  -4,899
  -5,537
  -6,210
  -6,920
  -7,664
  -8,443
  -9,257
  -10,106
  -10,989
  -11,909
  -12,865
  -13,858
  -14,891
  -15,964
  -17,079
  -18,239
  -19,445
  -20,699
  -22,005
  -23,365
  -24,781
  -26,258
  -27,797
Depreciation, amort., depletion, $m
  507
  620
  744
  882
  1,034
  1,199
  1,377
  1,568
  1,771
  1,987
  2,215
  2,455
  2,706
  2,969
  3,244
  3,530
  3,828
  4,137
  4,459
  4,794
  5,142
  5,504
  5,879
  6,270
  6,676
  7,099
  7,539
  7,997
  8,475
  8,973
  9,492
Funds from operations, $m
  1,366
  -904
  -1,141
  -1,405
  -1,697
  -2,015
  -2,360
  -2,731
  -3,128
  -3,550
  -3,995
  -4,465
  -4,958
  -5,474
  -6,013
  -6,576
  -7,162
  -7,771
  -8,405
  -9,064
  -9,749
  -10,461
  -11,200
  -11,969
  -12,768
  -13,600
  -14,466
  -15,367
  -16,306
  -17,285
  -18,305
Change in working capital, $m
  639
  122
  138
  153
  168
  183
  197
  212
  226
  239
  252
  266
  278
  291
  304
  317
  330
  343
  357
  371
  385
  400
  416
  433
  450
  468
  487
  508
  529
  551
  575
Cash from operations, $m
  727
  -1,026
  -1,278
  -1,558
  -1,864
  -2,198
  -2,558
  -2,943
  -3,354
  -3,789
  -4,248
  -4,730
  -5,236
  -5,765
  -6,317
  -6,893
  -7,492
  -8,115
  -8,762
  -9,435
  -10,134
  -10,861
  -11,616
  -12,402
  -13,219
  -14,068
  -14,953
  -15,875
  -16,835
  -17,836
  -18,880
Maintenance CAPEX, $m
  0
  -509
  -620
  -744
  -882
  -1,034
  -1,199
  -1,377
  -1,568
  -1,771
  -1,987
  -2,215
  -2,455
  -2,706
  -2,969
  -3,244
  -3,530
  -3,828
  -4,137
  -4,459
  -4,794
  -5,142
  -5,504
  -5,879
  -6,270
  -6,676
  -7,099
  -7,539
  -7,997
  -8,475
  -8,973
New CAPEX, $m
  -306
  -952
  -1,068
  -1,186
  -1,303
  -1,418
  -1,532
  -1,643
  -1,751
  -1,857
  -1,960
  -2,062
  -2,162
  -2,261
  -2,361
  -2,460
  -2,562
  -2,664
  -2,770
  -2,879
  -2,992
  -3,109
  -3,231
  -3,360
  -3,494
  -3,636
  -3,785
  -3,941
  -4,107
  -4,281
  -4,465
Cash from investing activities, $m
  -318
  -1,461
  -1,688
  -1,930
  -2,185
  -2,452
  -2,731
  -3,020
  -3,319
  -3,628
  -3,947
  -4,277
  -4,617
  -4,967
  -5,330
  -5,704
  -6,092
  -6,492
  -6,907
  -7,338
  -7,786
  -8,251
  -8,735
  -9,239
  -9,764
  -10,312
  -10,884
  -11,480
  -12,104
  -12,756
  -13,438
Free cash flow, $m
  409
  -2,488
  -2,966
  -3,488
  -4,049
  -4,650
  -5,288
  -5,962
  -6,672
  -7,417
  -8,195
  -9,007
  -9,853
  -10,733
  -11,647
  -12,597
  -13,583
  -14,607
  -15,669
  -16,773
  -17,920
  -19,112
  -20,351
  -21,641
  -22,983
  -24,380
  -25,837
  -27,355
  -28,939
  -30,592
  -32,319
Issuance/(repayment) of debt, $m
  -112
  1,483
  1,666
  1,850
  2,033
  2,213
  2,390
  2,563
  2,732
  2,897
  3,058
  3,217
  3,373
  3,528
  3,683
  3,839
  3,996
  4,157
  4,322
  4,491
  4,667
  4,850
  5,041
  5,241
  5,451
  5,672
  5,904
  6,149
  6,407
  6,679
  6,966
Issuance/(repurchase) of shares, $m
  517
  1,701
  2,083
  2,506
  2,971
  3,476
  4,020
  4,603
  5,223
  5,880
  6,573
  7,301
  8,064
  8,861
  9,694
  10,561
  11,463
  12,402
  13,377
  14,391
  15,444
  16,539
  17,677
  18,860
  20,091
  21,372
  22,705
  24,094
  25,541
  27,050
  28,623
Cash from financing (excl. dividends), $m  
  390
  3,184
  3,749
  4,356
  5,004
  5,689
  6,410
  7,166
  7,955
  8,777
  9,631
  10,518
  11,437
  12,389
  13,377
  14,400
  15,459
  16,559
  17,699
  18,882
  20,111
  21,389
  22,718
  24,101
  25,542
  27,044
  28,609
  30,243
  31,948
  33,729
  35,589
Total cash flow (excl. dividends), $m
  791
  697
  782
  869
  954
  1,039
  1,122
  1,203
  1,283
  1,360
  1,436
  1,510
  1,584
  1,657
  1,729
  1,802
  1,876
  1,952
  2,029
  2,109
  2,192
  2,278
  2,367
  2,461
  2,560
  2,663
  2,772
  2,887
  3,009
  3,136
  3,271
Retained Cash Flow (-), $m
  162
  -1,701
  -2,083
  -2,506
  -2,971
  -3,476
  -4,020
  -4,603
  -5,223
  -5,880
  -6,573
  -7,301
  -8,064
  -8,861
  -9,694
  -10,561
  -11,463
  -12,402
  -13,377
  -14,391
  -15,444
  -16,539
  -17,677
  -18,860
  -20,091
  -21,372
  -22,705
  -24,094
  -25,541
  -27,050
  -28,623
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
 
  460
  -1,300
  -1,638
  -2,017
  -2,437
  -2,898
  -3,400
  -3,941
  -4,520
  -5,137
  -5,791
  -6,480
  -7,205
  -7,964
  -8,758
  -9,587
  -10,450
  -11,348
  -12,282
  -13,253
  -14,262
  -15,310
  -16,399
  -17,531
  -18,708
  -19,933
  -21,206
  -22,532
  -23,913
  -25,352
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
 
  429
  -1,119
  -1,294
  -1,452
  -1,584
  -1,686
  -1,754
  -1,784
  -1,777
  -1,733
  -1,656
  -1,551
  -1,423
  -1,279
  -1,126
  -971
  -820
  -676
  -546
  -430
  -331
  -248
  -181
  -129
  -89
  -60
  -39
  -24
  -15
  -9
Current shareholders' claim on cash, %
  100
  48.0
  23.0
  11.0
  5.3
  2.5
  1.2
  0.6
  0.3
  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
  0.0
  0.0
  0.0
  0.0
  0.0

United States Steel Corporation is an integrated steel producer. The Company is engaged in producing flat-rolled and tubular products with production operations in North America and Europe. The Company operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE) and Tubular Products (Tubular). The Flat-Rolled segment includes the operating results of its integrated steel plants and equity investees in the United States involved in the production of slabs, rounds, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States. The USSE segment includes the operating results of U. S. Steel Kosice (USSK) and its integrated steel plant and coke production facilities in Slovakia. The Tubular segment includes the operating results of its tubular production facilities, primarily in the United States and equity investees in the United States and Brazil.

FINANCIAL RATIOS  of  United States Steel (X)

Valuation Ratios
P/E Ratio -9.9
Price to Sales 0.4
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 6
Price to Free Cash Flow 10.4
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 21.7% 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 176.022 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 $4.4 billion.

RELATED COMPANIES Price Int.Val. Rating
WOR Worthington In 51.26 334.74  str.buy
RS Reliance Steel 72.45 8.49  str.sell
CLF Cleveland-Clif 7.13 2.72  str.sell
MT ArcelorMittal 26.74 6.05  str.sell
NUE Nucor 53.50 4.55  str.sell
STLD Steel Dynamics 33.34 2.60  str.sell
SCHN Schnitzer Stee 26.80 3.03  str.sell
CMC Commercial Met 18.06 2.80  str.sell
CRS Carpenter Tech 41.42 4.99  str.sell

COMPANY NEWS

▶ Top 10 Steel Importers: Is US Steel Industry Justified?   [Sep-19-17 08:07AM  Market Realist]
▶ AP Exclusive: Evidence of spills at toxic site during floods   [Sep-18-17 07:38PM  Associated Press]
▶ Steel Maker Cites 'Slow' Trump Help For Earnings Warning   [Sep-15-17 04:00PM  Investor's Business Daily]
▶ Bulls or Bears: Whos Take the Trophy for U.S. Steel?   [Sep-14-17 10:39AM  Market Realist]
▶ The History of United States Steel Stock   [Sep-13-17 09:47PM  Motley Fool]
▶ What Could Do the Trick for US Steel Prices   [09:07AM  Market Realist]
▶ This Could Drive U.S. Steels 2018 Performance   [07:37AM  Market Realist]
▶ Does U.S. Steels Outlook Justify Its High Valuations?   [Sep-12-17 10:37AM  Market Realist]
▶ Should US Steelmakers Stop Bashing China?   [09:08AM  Market Realist]
▶ Why U.S. Steels Rally Might Not Be Over Yet   [07:37AM  Market Realist]
▶ U.S. Steel Keeps Both Bulls and Bears Interested   [Sep-06-17 05:36PM  Market Realist]
▶ What Challenges Could AK Steel Face in 4Q17?   [10:37AM  Market Realist]
▶ Can AK Steel Recoup Its 2017 Losses?   [Sep-05-17 12:57PM  Market Realist]
▶ Could US Steel Bears Be In for a Rough Ride?   [07:37AM  Market Realist]
▶ U.S. Steel Corporation: Is It Time to Shed Pessimism?   [Aug-30-17 01:50PM  Market Realist]
▶ U.S. Steel: Catch Up Time!   [01:44PM  Barrons.com]
▶ Why AK Steel Still Has a Balance Sheet Problem   [Aug-22-17 12:35PM  Market Realist]
▶ Are the Markets Getting a Little Bearish on US Steel?   [Aug-21-17 10:35AM  Market Realist]
▶ Outlook for US Steel during the Delayed Imports Probe   [Aug-18-17 10:36AM  Market Realist]
▶ Trump Hasn't Sunk Infrastructure Stocks...Yet   [Aug-17-17 06:30PM  TheStreet.com]
▶ Does US Steel Have Room to Run Even Higher?   [10:13AM  Market Realist]
▶ Trump fires back after Merck CEO quits advisory council   [Aug-14-17 01:30PM  Yahoo Finance Video]
▶ Its Raining Cash for U.S. Steel amid Strong Markets   [Aug-09-17 10:36AM  Market Realist]
▶ How U.S. Steels 2Q17 Shipments Compare with AK Steel   [Aug-07-17 02:36PM  Market Realist]
▶ It may be time to get bullish on these steel stocks   [12:23PM  American City Business Journals]
▶ Trump Touts Market Prowess As Trump Stocks Erase Post-Election Gains   [Aug-02-17 04:05PM  Investor's Business Daily]
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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