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5 Reasons to Add U.S. Steel (X) Stock to Your Portfolio Now
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United States Steel Corporation’s (X - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it is poised to carry the momentum ahead.
Let’s delve deeper into the factors that make this steel giant an intriguing choice for investors right now.
What’s Working in Favor of X?
Solid Rank & VGM Score: U.S. Steel currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: U.S. Steel has outperformed the industry over the last six months. The company’s shares have rallied around 38.1% over this period, compared with roughly 11.8% gain recorded by the industry. Forecast-topping earnings performance in the last two quarters, upbeat outlook for 2018 and the Trump administration’s trade actions on imported steel have contributed to the rally in the company’s shares.
Strong Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for U.S. Steel is currently pegged at $4.67, reflecting an expected year-over-year growth of 140.7%. Moreover, earnings are expected to register a 9.9% growth in 2019. The company also has an expected long-term earnings per share growth of 8%.
Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value steel stocks, U.S. Steel is currently trading at trailing 12-month EV/EBITDA multiple of 6.8, cheaper compared with the industry average of 8.8.
Upbeat Outlook: U.S. Steel, last month, updated its full-year 2018 guidance. For the year, the company now expects EBITDA of roughly $1.7 billion (up from roughly $1.5 billion expected earlier), considering the potential market conditions resulting from the Section 232 actions and increased shipments from Granite City Works. It expects EBITDA to be roughly $250 million for the first quarter.
U.S. Steel stated that the revised guidance considers two factors, namely, the market dynamics related to President Trump’s decision to impose 25% tariff on steel imports and the recently announced restarting of one of the two blast furnaces and steelmaking facilities at Granite City Works.
Once the restarting process is completed, U.S. Steel expects roughly 100,000 tons of incremental shipments per month from Granite City Works. The company expects the benefits from these actions to be mainly reflected in its results in the second half of this year.
U.S. Steel is actively engaged in improving its cost structure and operations on a sustainable basis through its “Carnegie Way” initiative that includes actions such as manufacturing process/logistics improvements and savings on SG&A costs. The company realized Carnegie Way benefits of $491 million for full-year 2017, mostly in its Flat-Rolled division. These actions are also expected to deliver meaningful benefits in 2018.
United States Steel Corporation Price and Consensus
Other top-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , Methanex Corporation (MEOH - Free Report) and Eastman Chemical Company (EMN - Free Report) .
Methanex carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 15%. Its shares have gained around 30% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2. Its shares have gained around 28% over a year.
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5 Reasons to Add U.S. Steel (X) Stock to Your Portfolio Now
United States Steel Corporation’s (X - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it is poised to carry the momentum ahead.
Let’s delve deeper into the factors that make this steel giant an intriguing choice for investors right now.
What’s Working in Favor of X?
Solid Rank & VGM Score: U.S. Steel currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: U.S. Steel has outperformed the industry over the last six months. The company’s shares have rallied around 38.1% over this period, compared with roughly 11.8% gain recorded by the industry. Forecast-topping earnings performance in the last two quarters, upbeat outlook for 2018 and the Trump administration’s trade actions on imported steel have contributed to the rally in the company’s shares.
Strong Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for U.S. Steel is currently pegged at $4.67, reflecting an expected year-over-year growth of 140.7%. Moreover, earnings are expected to register a 9.9% growth in 2019. The company also has an expected long-term earnings per share growth of 8%.
Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value steel stocks, U.S. Steel is currently trading at trailing 12-month EV/EBITDA multiple of 6.8, cheaper compared with the industry average of 8.8.
Upbeat Outlook: U.S. Steel, last month, updated its full-year 2018 guidance. For the year, the company now expects EBITDA of roughly $1.7 billion (up from roughly $1.5 billion expected earlier), considering the potential market conditions resulting from the Section 232 actions and increased shipments from Granite City Works. It expects EBITDA to be roughly $250 million for the first quarter.
U.S. Steel stated that the revised guidance considers two factors, namely, the market dynamics related to President Trump’s decision to impose 25% tariff on steel imports and the recently announced restarting of one of the two blast furnaces and steelmaking facilities at Granite City Works.
Once the restarting process is completed, U.S. Steel expects roughly 100,000 tons of incremental shipments per month from Granite City Works. The company expects the benefits from these actions to be mainly reflected in its results in the second half of this year.
U.S. Steel is actively engaged in improving its cost structure and operations on a sustainable basis through its “Carnegie Way” initiative that includes actions such as manufacturing process/logistics improvements and savings on SG&A costs. The company realized Carnegie Way benefits of $491 million for full-year 2017, mostly in its Flat-Rolled division. These actions are also expected to deliver meaningful benefits in 2018.
United States Steel Corporation Price and Consensus
United States Steel Corporation Price and Consensus | United States Steel Corporation Quote
Other Stocks to Consider
Other top-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , Methanex Corporation (MEOH - Free Report) and Eastman Chemical Company (EMN - Free Report) .
Kronos sports a Zacks Rank #1 and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 34% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Methanex carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 15%. Its shares have gained around 30% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2. Its shares have gained around 28% over a year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>