In 1917, the largest company in the United States by market cap was U.S. Steel, with a valuation of $46.4 billion. Adjusted for inflation, that would put today’s U.S. Steel Corp. (NYSE: X) in fourth place among U.S. firms, with a market cap of nearly $1.02 trillion, trailing only Apple, Microsoft and Amazon, companies with technologies that weren’t even dreamt of in 1917.
How, then, can U.S. Steel’s current market cap be a mere $1.6 billion? That’s a subject for scholars, not investors, and investors are the ones paying the price for the steelmaker’s fall from the heights. On Wednesday, for example, the company warned of an expected EBITDA loss in the current quarter of around $315 million, not including about $100 million in restructuring and other charges.
That’s not all. U.S. Steel also announced an underwritten secondary stock offering for 50 million new shares. Gross proceeds totaled $429 million, implying a per-share price of around $8.58. Shares had closed at nearly $10.50 on Tuesday. The underwriters still have an option on 7.5 million additional shares.
On Thursday, another steelmaker, Nucor Corp. (NYSE: NUE), issued second-quarter guidance that was quite different in tone. Nucor said it expected to post earnings per share (EPS) of $0.10 to $0.15 in the quarter, a long way from the $1.26 the company posted a year ago. In the first quarter, Nucor wrote down almost $288 million ($0.92 per share) on the value of Nucor’s investment in Italian steelmaker Duferdofin and still posted positive earnings of $0.07 per share.
Analysts had expected Nucor to post EPS of $0.03 in the second quarter on revenues of $4.37 billion. U.S. Steel’s projected second-quarter loss was $2.02 per share. The company now says it expects a loss of $3.06 per share.
Nucor bolstered its balance sheet with new debt offerings totaling $1 billion. The $500 million note due in 2025 carries a coupon of 2.0% and the $500 million note due in 2020 carries a coupon of 2.7%.
U.S. Steel also added $700 million to its liquidity in the second quarter through the issuance of new debt due in 2025 with a coupon of 12.0%. In its guidance statement Wednesday, the company said it expects its liquidity requirements to reach $700 million through the end of this year.
According to data compiled by the American Iron and Steel Institute (AISI), U.S. steel mills shipped 5.6 million net tons of steel in April, a drop of 28% month over month and a decline of nearly 32% compared to April 2019. Shipments for the year to date total 29.7 net tons, a decline of 8.1% compared 2019 shipments for the same period.
AISI also reported that total steel imports were up 58% month over month in March but down 20% for the year to date. An annualized total for all steel imports calculates to a drop of 1.4% compared with 2019.
The steel industry, including Nucor and U.S. Steel, continues to hope for a promised $1 trillion infrastructure spending bill from the Trump administration. In its guidance statement Wednesday, Nucor noted that demand from nonresidential construction remains “resilient” while markets like automakers and oil and gas drillers are weak.
Nucor stock traded up about 0.7% Thursday morning, at $44.29 in a 52-week range of $27.53 to $58.70. The 12-month consensus price target on the stock is $44.00.
U.S. Steel shares were down nearly 10% to $8.46. The 52-week range is $4.54 to $15.90, and the consensus price target is $6.62.