Critical Review: United States Steel (X) vs. Olympic Steel (ZEUS)
United States Steel (NYSE: X) and Olympic Steel (NASDAQ:ZEUS) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.
United States Steel pays an annual dividend of $0.20 per share and has a dividend yield of 0.6%. Olympic Steel pays an annual dividend of $0.08 per share and has a dividend yield of 0.4%. United States Steel pays out 29.9% of its earnings in the form of a dividend. Olympic Steel pays out 7.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Volatility & Risk
United States Steel has a beta of 3, meaning that its stock price is 200% more volatile than the S&P 500. Comparatively, Olympic Steel has a beta of 1.79, meaning that its stock price is 79% more volatile than the S&P 500.
This is a breakdown of recent ratings for United States Steel and Olympic Steel, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|United States Steel||3||6||8||0||2.29|
United States Steel presently has a consensus target price of $28.78, indicating a potential downside of 7.49%. Olympic Steel has a consensus target price of $23.50, indicating a potential upside of 16.45%. Given Olympic Steel’s stronger consensus rating and higher possible upside, analysts plainly believe Olympic Steel is more favorable than United States Steel.
Insider & Institutional Ownership
64.3% of United States Steel shares are owned by institutional investors. Comparatively, 68.0% of Olympic Steel shares are owned by institutional investors. 1.0% of United States Steel shares are owned by company insiders. Comparatively, 18.3% of Olympic Steel shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This table compares United States Steel and Olympic Steel’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|United States Steel||4.53%||22.00%||6.06%|
Earnings & Valuation
This table compares United States Steel and Olympic Steel’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|United States Steel||$10.26 billion||0.53||-$440.00 million||$0.67||46.43|
|Olympic Steel||$1.06 billion||0.21||-$1.07 million||$1.11||18.18|
Olympic Steel has lower revenue, but higher earnings than United States Steel. Olympic Steel is trading at a lower price-to-earnings ratio than United States Steel, indicating that it is currently the more affordable of the two stocks.
About United States Steel
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.
About Olympic Steel
Olympic Steel, Inc. is a metals service center. The Company provides metals processing and distribution services for a range of customers. The Company operates through three segments: carbon flat products, specialty metals flat products, and tubular and pipe products. The Company’s carbon flat products segment’s focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. The Company’s specialty metals flat products segment’s focus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. The Company’s tubular and pipe products segment consists of the Chicago Tube and Iron Company (CTI) business. Through its tubular and pipe products segment, it distributes metals tubing, pipe, bar, valve and fittings, and fabricate pressure parts supplied to various industrial markets.
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