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National Steel (SID) Q4 Earnings Miss Estimates, Shares Down

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National Steel’s (SID - Free Report) shares fell 17.3% since the company reported fourth-quarter 2021 results on Mar 9. The company reported net income of R$1,061 million ($190 million) during the fourth quarter compared with the R$3,897 million ($722 million) in the prior-year quarter. The company delivered earnings per share (EPS) of 14 cents, missing the Zacks Consensus Estimate of 28 cents per share. It reported EPS of 52 cents in the prior-year quarter. Strong rainfall volume and the planned operational halts in November unfavorably impacted the fourth quarter’s results.

During the December-end quarter, net revenues came in at R$10,361 million ($1,857 million), up 6% year over year. Volume recovery in the steel segment and the Elizabeth Cements acquisition contributed to growth. The top-line figure missed the Zacks Consensus Estimate of $2,108 million. Domestic revenues increased 31% year over year to R$5,456 million ($978 million). The company’s international business declined 13% year over year to R$4,905 million ($879 million), contributing 47% to net revenues.

Segment Performance

Steel: The segment’s revenues totaled R$7,648 million ($1,371 million), up 51%, year on year. Production of flat-rolled steel products came in at 616 thousand tons and long-rolled products were 74 thousand tons during the reported quarter.

Mining: The segment generated revenues of R$2,401 million ($430 million), down 47% year on year.

Logistics: Revenues came in at R$530 million ($95 million), up 16% year over year.

Cement: The segment’s revenues totaled R$423 million ($76 million), increasing 51% year over year on the back of the integration of Elizabeth Cements.

Energy: The segment’s revenues fell 11% year over year to R$47 million ($8 million).

Margin & Costs

In the fourth quarter, the company’s cost of sales came in at R$6,606 million ($1,183 million) compared with R$5,596 million ($1,036 million) recorded in the year-ago quarter. Gross profit declined 11% year on year to R$3,755 million ($673 million). Gross margin came in at 36% compared with the year-earlier quarter’s 43%.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 21% year over year to R$3,727 million ($668 million). EBITDA margin was 36% in the reported quarter compared with the prior-year quarter’s 48%.

Balance Sheet & Cash Flow

The company had cash and cash equivalents of R$16,646 million ($2,988 million) at the end of 2021, up from R$9,945 million ($1,915 million) at the end of 2020. Net debt to adjusted EBITDA ratio was 0.76 in the fourth quarter, down from the prior-year quarter’s 2.23.

Price Performance

National Steel’s shares have fallen 24.5% in the past year, against the industry’s growth of 25.9%.

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Zacks Rank & Stocks to Consider

National Steel currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are The Mosaic Company (MOS - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Allegheny Technologies Incorporated (ATI - Free Report) .

Mosaic has a projected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for MOS' current-year earnings has been revised upward by 22.2% in the past 60 days.

Mosaic beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 3.7%. MOS has rallied around 87.3% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AdvanSix has a projected earnings growth rate of 30.6% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 25% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, while missing once, the average surprise being 23.6%. ASIX has surged 57.3% in a year. The company currently carries a Zacks Rank #2 (Buy).

Allegheny, currently carrying a Zacks Rank #2, has an expected earnings growth rate of 661.5% for the current year. The Zacks Consensus Estimate for ATI's earnings for the current year has been revised upward by 45.6% in the past 60 days.

Allegheny beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 127.2%. ATI has rallied around 21.3% over a year.


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