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U.S. Steel (X) to Post Q2 Earnings: What's in the Offing?

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United States Steel Corporation (X - Free Report) is scheduled to come up with its second-quarter 2021 results after the bell on Jul 29. Strong end-market demand and higher steel prices are likely to have driven its second-quarter results. The company is also expected to have benefited from its actions to improve cost and operating performance in the quarter.

The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 24%. It delivered an earnings surprise of roughly 18.7% in the last reported quarter.

Shares of U.S. Steel have shot up 198.1% over a year, compared with the industry’s rise of 126.9%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Zacks Model

Our proven model predicts an earnings beat for U.S. Steel this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for U.S. Steel is +1.50%. The Zacks Consensus Estimate for the second quarter is currently pegged at $3.11. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: U.S. Steel currently carries a Zacks Rank #2.

What do the Estimates Say?

U.S. Steel, last month, issued its guidance for the second quarter. It expects second-quarter adjusted earnings per share to be roughly $3.08. It also sees adjusted net income for the quarter to be $880 million. The company also projects adjusted EBITDA to be around $1.2 billion.

The Zacks Consensus Estimate for revenues for U.S. Steel for the second quarter is currently pinned at $4,703 million, indicating a 124.9% year-over-year rise.

Moreover, the Zacks Consensus Estimate for shipments for the company’s Flat-Rolled unit for the quarter currently stands at 2,311,000 tons, reflecting a 0.9% sequential decline. The consensus estimate for average realized price per ton in the unit stands at $1,076, suggesting a 21.2% sequential increase.

The Zacks Consensus Estimate for shipments for U.S. Steel Europe segment is pegged at 1,067,000 tons, indicating a 2.3% sequential rise. The same for average realized price per ton in the unit stands at $837, calling for a 35% sequential increase.

For the Tubular segment, the consensus estimate for shipments is pegged at 113,000 tons, reflecting a 26% sequential rise. The same for average realized price per ton in the unit stands at $1,401, calling for a 2.1% sequential increase.

Some Factors at Play

The company’s second-quarter results are likely to have benefited from strong demand across end markets, higher domestic steel prices, the Big River Steel buyout and its efforts to improve operation efficiency and reduce costs.

U.S. Steel benefited from strong market fundamentals underpinned by strong demand and low steel inventories in the second quarter. Higher steel selling prices are also expected to have driven margins in its Flat-rolled, Mini Mill and U.S. Steel Europe segments in the quarter.

Notably, U.S. steel prices are on a tear driven by an upturn in demand, supply shortages and higher raw material costs. Prices have hit record levels after plunging to pandemic-induced multi-year lows in August 2020. The benchmark hot-rolled coil (“HRC”) prices started to recover in September 2020, and the bull run continues this year. HRC prices shot past the $1,600 per short ton level in May 2021 and remained above that level through June amid tight supply and robust demand. Higher domestic steel prices are likely to have boosted the company’s selling prices and supported its bottom line in the to-be-reported quarter.

 

United States Steel Corporation Price and EPS Surprise

 

United States Steel Corporation Price and EPS Surprise

United States Steel Corporation price-eps-surprise | United States Steel Corporation Quote

 

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

LyondellBasell Industries N.V. (LYB - Free Report) , scheduled to release earnings on Jul 30, has an Earnings ESP of +6.99% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Westlake Chemical Corporation (WLK - Free Report) scheduled to release earnings on Aug 3, has an Earnings ESP of +1.50% and carries a Zacks Rank #1.

Eastman Chemical Company (EMN - Free Report) , scheduled to release earnings on Aug 2, has an Earnings ESP of +0.90% and carries a Zacks Rank #3.