United States Steel Corporation (X Quick QuoteX - Free Report) will receive additional project investments from Nippon Steel Corporation at its Mon Valley Works and Gary Works. This is subject to the completion of Nippon Steel’s pending acquisition of X and the receipt of any required regulatory approvals.

The growth investments announced by Nippon Steel will extend the production life of two of U.S. Steel's key integrated assets while improving steel supply security for American manufacturers. The investments will involve significant spending beyond calendar year 2026 and are in addition to Nippon Steel's already stated $1.4 billion capital commitment, which will be used to fund maintenance and other necessary capital investments in the current BLA-covered plants.

Nippon Steel will invest at least $1 billion to improve Mon Valley Works' competitiveness, including increased yield, energy efficiency, product quality and overall operational effectiveness. Nippon Steel intends to keep Mon Valley Works operational for decades to come. It will make the required investments to keep it profitable and create jobs for future generations of steelworkers in Pennsylvania. As part of that pledge, and following the completion of the pending buyout of U.S. Steel, Nippon Steel will replace and/or upgrade the existing hot strip mill at Mon Valley Works, among other facilities. 

U.S. Steel's blast furnace operations will benefit from its acquisition by Nippon Steel. As part of this, Nippon Steel will spend around $300 million to renovate Blast Furnace #14 at Gary Works. The refurbishment is projected to extend the facility's operational life by up to 20 years. 

Shares of U.S. Steel have gained 21.7% over the past year against 17.5% decline of its industry.

Image Source: Zacks Investment Research

U.S. Steel, on its second-quarter call, said that it expects adjusted EBITDA for the third quarter in the band of $275-$325 million, factoring in recent pricing dynamics, which continue to impact its business. It expects the results in the North American Flat-Rolled segment to soften as reduced spot prices more than offset the continued strength in contract order book and lower spending. In the Mini Mill segment, X expects results to reflect lower spot prices and $30 million of associated start-up and one-time construction costs ahead of the planned start-up of Big River 2 in the fourth quarter.

The results in the Europe unit are forecast to be consistent with the second quarter as lower selling prices are largely offset by reduced raw material costs. The company expects lower results in the Tubular segment in the third quarter due to reduced selling prices.

Zacks Rank & Key Picks

X currently carries a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the basic materials space include Carpenter Technology Corporation (CRS Quick QuoteCRS - Free Report) , Eldorado Gold Corporation (EGO Quick QuoteEGO - Free Report) and Newmont Corporation (NEM Quick QuoteNEM - Free Report) . 

Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.9%. The company's shares have soared 141.4% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Eldorado’s current-year earnings is pegged at $1.35 per share, indicating a year-over-year rise of 136.8%. The Zacks Consensus Estimate for EGO's current-year earnings has been going up in the past 30 days. EGO, a Zacks Rank #1 stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 92.6% in the past year.

The Zacks Consensus Estimate for Newmont’s current-year earnings is pegged at $2.82, indicating a rise of 75% from the year-ago levels. The consensus mark for NEM’s earnings has increased 14% in the past 60 days. NEM, a Zacks Rank #1 stock, has gained nearly 33.4% in the past year.