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Bear of the Day: U.S. Steel (X)

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To start the year, things were looking pretty promising for U.S. Steel ((X - Free Report) ). The economy was firing on all cylinders, politics appeared to be on their side, and there was plenty of hope for a strong year in X stock. However, while the start of the year was pretty good, some cracks have started to appear in the U.S. Steel story.

This was especially the case in the company’s most recent earnings report, as U.S. Steel posted a horrific miss that was a loss of 83 cents per share compared to expectations of a 32 cent per share profit. The outlook was also pretty poor for U.S. Steel, and that is a big part of the reason that the stock has struggled so much in the past few months.

U.S. Steel Numbers in Focus

In fact, we have seen universal agreement among analysts in our consensus that the earnings picture is getting much worse for U.S. Steel. And that is not just for the current quarter, but for the current year and next year periods too.

The magnitude of these cuts has also been pretty bad, as the consensus for the current year has collapsed from $3.37/share 60 days ago to just $1.05/share today. To make matters even worse, the most accurate estimate on X stock is now at just 60 cents per share, a roughly 80% cut from just two months ago!

Clearly, the earnings picture and outlook is quite poor for U.S. Steel. As such, it shouldn’t be a surprise at all that the company has earned itself a Zacks Rank #5 (Strong Sell) and that we are looking for the sluggish trading as of late to continue, so long as the earnings picture remains this terrible.

Other Choices

If investors are dead-set on the basic materials market, they should note that the space doesn’t have a great outlook and is in the bottom half of the sector rank right now. And while the steel producers segment also has a weak rank, the specialty corner of the steel world is doing pretty well and has a top 10% rank right now.

One name to take a closer look at in this market is Carpenter Technology ((CRS - Free Report) ). This is a Zacks Rank #2 (Buy) stock with an ‘A’ Grade in Momentum too. This company recently beat earnings estimates, and its current year consensus estimate has risen by nearly 14% in the past two months, potentially making it a better pick for steel investors, at least over U.S. Steel, in the near term.

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