RE:RE:RE:It's all in the price of steel Good conversation Jasonuw:
agree lots of factors at play. also exchange rate which has range between 1.20 to 1.30 this year impacts revenue amounts we see each quarter.
kestenbaum has said on calls takes 3 to 4 months from when deal signed to price used. Probably better to use averages. Also on last call he did say they have negotiated longer term contracts as steel futures are backward and not the real price. No way to know mix of contract and spot price.
Bottom line though if you take a higher level view is he said on last call 2022 could equal the greater than 2 billion ebitda they have guided for in 2021 and stock trading at 0.8 ebitda right now. This is same thing clevland cliffs ceo said on their conference call That is really low when historically a cyclical like steel should be closer to 4 times ebitda. Ebitda is good proxy for cash generation so another 2 billion next year is another $26 a share.
Only negative scenario I see is prices need to go below $500 Usd a ton and stay they for few years. Highly unlikely unless we have recession. How can one have recession during a pandemic when every government is super accomodative and keeping interest rates at zero and heavily supporting auto sector.
hoping they announce buy back soon as share price is so low and get on with buying stock back at these levels.
If stays low too long exposes one to a go private transaction also where full value would not be realized by all shareholders. Have seen this happen before where controlling shareholders scoop company at cheap price. CEO at about 10 percent ownership now can significantly influence such a transaction.