United States Steel's Crash: An Unmissable Buying Opportunity

Key Points

• United States Steel stock has fallen by 12% in a single week due to takeover deal talks with Japan, creating a new opportunity for investors.
• Momentum is still present in the stock, as the steel industry could soar on new tariff implementations.
• Analysts see double-digit upside and massive EPS growth in the coming quarters.

Shocks in the global financial markets have been accelerating in the past couple of weeks, especially as President Trump rolls out more aggressive trade tariffs in response to China's refusal to retaliate on the reciprocal tariff plan with all other trading partners. With this in mind, one specific issue is at play when it comes to the industrial sector of the United States, which seems to be at the heart of the agenda for these tariffs.

Japan, one of the United States' largest trading partners, is reportedly preparing to send a team to negotiate the terms of these tariffs. However, one small detail might halt all progress before any terms are even discussed. Japanese investors have expressed their interest in acquiring the totality of United States Steel Co. NYSE: X, a desire that President Trump has stepped in to prevent from happening.

This action brought the stock lower by 12% at one point in the second week of April 2025, as blocking this takeover deal caused an elevated level of uncertainty in markets and those holding onto United States Steel stock today. That being said, investors who are in doubt about whether this company can recover from its dismal discount right now may find better answers by zooming out a bit.

What Scenario Plays Out?

When trade wars occurred in 2018, United States Steel stock also fell on the uncertainty of trade volume and global commerce, only to recover fourfold from 2019 onwards. Today, the same thing seems to be playing out again, especially as the stock has hovered down to 88% of its 52-week high.

While this recent selloff might discourage some investors and fill them with further uncertainty, they can rest assured that United States Steel has outperformed the broader S&P 500 by as much as 20% over the past month alone, and the market could have a very good reason for giving this company some preference.

One reason could be that if these trade tariffs are successful in bringing manufacturing activity and volumes back into the United States, then a few commodities will become red-hot in demand to meet the necessities of the logistics change appropriately.

Of course, steel is among these commodities, and the market seems to have already settled on a high-probability outcome for these tariffs to benefit steel demand and, therefore, the future earnings and upside potential in United States Steel stock.

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What’s Next for United States Steel?

Some of these outlooks have started to become more concrete in recent weeks, as up to $605 million worth of institutional capital has started to make its way into the stock, as reported by buying activity over the past quarter alone. Still, there's another important piece of information to consider.

Another $11 million of institutional buying has also taken place this quarter (including April so far). This one matters a lot more, considering that willing buyers were still looking to get a piece of the steel action despite China's heated retaliation on tariffs.

But the optimism doesn't stop there; Wall Street analysts now forecast up to $0.96 in earnings per share (EPS) for United States Steel during the second quarter of 2025, which is a welcome boost from today's reported net loss of $0.18 per share. Knowing that where EPS goes, the stock price is likely to follow, investors have another reason to stay vigilant.

Speaking of being vigilant, other Wall Street analysts, those from BMO Capital Markets specifically, decided to reiterate their valuation targets on United States Steel stock as of late March 2025. The consensus view from these ratings is that United States Steel could trade as high as $45 per share, which calls for up to 11% upside compared to the recent decline.

Looking to match the lost ground for the week, these analysts feel pretty confident that the company has what it takes to get back on track. After this momentum is reclaimed, more momentum buyers or further valuation boosts might follow.

Even after outperforming the S&P 500 and giving momentum buyers all the reasons to hold onto this stock, the ceiling is still much higher for United States Steel. Today, the stock trades at only 0.8x price-to-book (P/B), which is a steep discount to the rest of the materials sector's average 4.9x valuation today.

No wonder these Japanese buyers are fighting to acquire a company that could become red-hot in the coming months now that it trades at such an undeniable discount to peers.