The BlueScope Steel Limited (ASX: BSL) share price has had an excellent start to 2025, rising by 30%. The S&P/ASX 200 Index (ASX: XJO) has only gone up by 1% in the same time period, so it's been a great time to be a shareholder of the steel business.
About a month ago, I suggested that BlueScope could be one of Australia's biggest winners this year, and it has already been a great performer.
I'd understand if some shareholders decide to take the profits off the table because the rise appears to have been spurred by the US decision related to steel tariffs. But let's look at why the picture could become even better for the business.
What's benefiting BlueScope Steel shares?
As noted by various media, including Reuters, BlueScope will be a beneficiary of US President Donald Trump's 25% tariffs on steel and aluminium into the US. BlueScope has a few businesses inside North America, including the large US North Star steelmaking facilities.
The BlueScope CEO Mark Vassella noted that steel prices rose 20% in the week following Trump's tariff announcement.
Vassella said the underlying demand in the US for the company's steel was "pretty good" for industries such as building and construction, automation, and manufacturing end-use.
Reuters also noted that Vassella said the Trump administration's previous steel tariffs sent steel prices higher from US$500 per tonne to US$800 to US$900 per tonne. Vassella then said:
Being a domestic manufacturer, we will potentially benefit from any increase in price that occurred because of the tariffs and the impact they have on imported steel coming into the country.
North America was the largest source of underlying operating profit (EBITDA) for the ASX 200 share for the six months to 31 December 2024.
In the first half of FY25, the business made underlying earnings before interest and tax (EBIT) of $309 million, underlying net profit after tax (NPAT) of $176 million, and reported net profit of $179 million.
Can the business keep climbing?
Investors are clearly expecting financial improvements from the company with how the share price has risen. The projections for profit in the next few years is promising.
According to the forecasts on Commsec, the BlueScope share price is valued at 25x FY25's estimated earnings. But then the forecasts show profit could almost double in FY26 and then rise another 28% in FY27.
Based on those numbers, the BlueScope share price is valued at 13x FY26's estimated earnings and approximately 10x FY27's projected profit. If the company delivers on those projections, or achieves even more, it could continue to excite the market further.
