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NEW YORK (TheStreet) -- Shares of United States Steel (X - Get Report) closed up 4.44% to $26.36 on Friday after peer company ArcelorMittal (MT)announced fourth-quarter results that showed reduced debt despite plunging iron ore prices.
ArcelorMittal, the world''s largest steel producer, announced it had cut its debt to the lowest levels since the company''s creation in 2006. The company said net debt dropped by $2 billion in the fourth quarter last year to $15.8 billion, and again stated it was targeting a net debt level of approximately $15 billion in the medium term.
ArcelorMittal also cautioned that profits would be lower this year. The company expects core profits to fall to a range of $6.5 billion to $7 billion in 2015, down from $7.2 billion in 2014 as the plunge in iron ore prices weighed down earnings in the company''s mining business. A slowdown in steel market growth from last year also affected the guidance.
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Analysts polled by Thomson Reuters expected core profit to climb to $7.4 billion in 2015.
ArcelorMittal''s report was encouraging news for peer companies such as United States Steel and the earnings announcement helped lift other steel stocks on Friday.
Separately, TheStreet Ratings team rates UNITED STATES STEEL CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED STATES STEEL CORP (X) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company''s strengths can be seen in multiple areas, such as its good cash flow from operations, growth in earnings per share and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
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Net operating cash flow has significantly increased by 3600.00% to $245.00 million when compared to the same quarter last year. In addition, UNITED STATES STEEL CORP has also vastly surpassed the industry average cash flow growth rate of -38.98%.
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UNITED STATES STEEL CORP''s earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, UNITED STATES STEEL CORP turned its bottom line around by earning $0.63 versus -$11.68 in the prior year. This year, the market expects an improvement in earnings ($1.93 versus $0.63).
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The company''s current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, UNITED STATES STEEL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
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The gross profit margin for UNITED STATES STEEL CORP is currently extremely low, coming in at 14.88%. Regardless of X''s low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.75% trails the industry average.
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X has underperformed the S&P 500 Index, declining 5.61% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company''s numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
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You can view the full analysis from the report here: X Ratings Report 不銹鋼展-2015第十六屆廣州國(guó)際不銹鋼工業(yè)展-效果最好的不銹鋼展會(huì)-The 16th China(Guangzhou)Int''l Stainless Steel Industry Exhibition
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