FEATURED SLIDESHOW
Who Is The Worst CEO?Mad Money needed new inductees for its
Wall of Shame, so we asked viewers for
nominations.
RECENT POSTS
- Remorseful Regulator Leads Reform Fight
- Lightning Round: AT&T, Verizon, Novartis and More
- Lightning Round OT: Alcoa, Weight Watchers and More
- Why Amazon Rules Retail
- Nordic American: Sinking Ship or Titan Tanker?
- Cramer: What Monday’s Housing Number Really Means
- Cramer: Buy These Banks, If...
- Time to Buy Treasurys?
- Lightning Round: Las Vegas Sands, ADC Telecom, Satyam Computer and More
- Lightning Round OT: Knight Capital, Ebix and More
MAD MONEY FEATURES
PODCASTSWatch the Lightning Round whenever and wherever you want.
OFFICIAL MAD MONEY WIDGETGrab this all-in-one application and get recaps of the show sent right to your desktop or blog.
CRAMERS SOUNDBOARDAdmit it: You've always wanted to hit the "They
know nothing!" button. Here’s your chance.
CHECK OUT OUR PHOTOSCheck out Cramer on set, back to school, behind the scenes and more.
SHOP FOR MAD MERCHANDISEBuy Cramer books, bobbleheads and other Mad Money merchandise.
RING TONESPick up the phone! It's Cramer! New Mad Money sounds for your cell phone.
TEXT MESSAGE ALERTMad Money's mobile. Get show highlights sent to your phone.
Text Size 
U.S. Steel reports earnings on Tuesday, and Cramer’s expecting the worst.
The stock’s trading at two times earnings, and it’s still expensive. Why? Because the company will never make the earnings on which the multiple’s based. The steel market’s too tough, and the company’s underperforming. When that happens, analysts will cut estimates, sending X [X
Loading...
()
] tumbling down.
UBS, which downgraded U.S. Steel to “sell” from “buy” Monday and cut the company’s expected 2009 earnings to $5 a share from $8.15, is only one of three sell calls on the stock right now – despite a precipitous decline to about $31 from $196. That cut might look low, but it’s an anomaly among the 13 analysts that cover the company. The consensus estimate is actually $13.18 a share. Cramer doubts U.S. Steel is going to be able to meet even UBS’s lowball number, and that could result in a wave of more downgrades and estimate cuts.
U.S. Steel’s end markets are struggling; it sells to both the automotive and appliance industries. Plus, X sells to oil and gas drillers, and with prices plummeting and expenditure cuts planned in that industry, the company’s under a lot of pressure.
The big problem – yes, bigger even than those we’ve already mentioned – is that a stronger dollar and those ailing end markets are going to force the price of steel down. And that hurts especially bad for a company like U.S. Steel, whose costs are largely fixed. Competitors are enjoying cheap scrap prices, which have fallen $650 a ton to $250 just since July, but X is still mining its own iron ore. Cramer said the company would have to cut costs by 35% to 40% just to stay competitive with its scrap-using peers.
So as low as U.S. Steel has gone, Cramer thinks the stock could go even lower. X won’t be cheap again until it reaches $22 a share, he said. But even then, Nucor [NUE
Loading...
()
], with its variable scrap-based cost structure and a nice dividend, would be a better pick. Don’t expect a bottom until the one Bank of America analyst that put X in the sell block in August decides to recommend the stock.
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website?
Data is a real-time snapshot *Data is delayed at least 15 minutes