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Why Is U.S. Steel (X) Down 9.8% Since the Last Earnings Report?
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A month has gone by since the last earnings report for United States Steel Corporation (X - Free Report) . Shares have lost about 9.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
U.S. Steel Posts Loss in Q1, Revenues Lag Estimates
U.S. Steel recorded a net loss of $180 million or $1.03 per share in the first quarter of 2017, narrower than a net loss of $340 million or $2.32 per share a year ago. The results in the reported quarter include unfavorable adjustments of $35 million or $0.20.
Barring one-time items, the loss came in at $0.83 per share for the reported quarter that missed the Zacks Consensus Estimate of earnings of $0.32.
Revenues rose roughly 16.4% year over year to $2,725 million in the first quarter, but trailed the Zacks Consensus Estimate of $2,921 million.
Segment Highlights
U.S. Steel’s Flat-Rolled segment recorded a loss of $90 million in the reported quarter against a loss of $188 million in the year-ago quarter. However, the results in the reported quarter declined significantly compared with previous quarter, mainly due to higher raw material costs, increased planned outage costs, lower results from mining operations, and restart costs related to the Granite City hot strip mill and Keetac iron ore mine.
The USSE segment posted a profit of $87 million in the reported quarter, improving from loss of $14 million recorded a year ago. The results improved due to increased average realized prices and a favorable first-in-first-out (FIFO) inventory impact. The benefits were partly offset by lower shipment volumes and higher raw material costs, particularly for coking coal and iron ore.
U.S. Steel’s Tubular segment registered a loss of $57 million in the quarter, lower than a loss of $64 million a year ago. First-quarter results improved due to higher prices, increased shipments, lower spending and the absence of an unfavorable adjustment for obsolete inventory taken in the fourth quarter. These benefits were partly offset by increased substrate costs.
Financials
U.S. Steel exited first-quarter 2017 with cash and cash equivalents of $1,326 million, almost a two-fold year-over-year increase from $705 million.
Long-term debt decreased 7.7% from previous quarter to $2,752 million. The company generated negative operating cash flow of $135 million for the three months period ended Mar 31, 2017.
Outlook
U.S. Steel noted that the market conditions have continued to improve. Concurrently, the company announced that it will focus on long-term and sustainable improvements in business model to remain a strong business partner that creates value for customers.
However, the company acknowledged that it remains exposed to a cyclical industry and aims to revitalize assets to achieve more reliable and consistent operations, improved quality and cost performance.
If market conditions remain at their current levels, U.S. Steel expects net earnings of around $260 million or $1.50 per share, and EBITDA (earnings before interest, tax, depreciation and amortization) of roughly $1.1 billion for 2017. The results for its Flat-Rolled, European and Tubular segments are anticipated to be higher than 2016.
The company believes market conditions to change in 2017 and it expects these changes to be reflected in adjusted EBITDA and net earnings.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 44.6% due to these changes.
United States Steel Corporation Price and Consensus
At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.
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Why Is U.S. Steel (X) Down 9.8% Since the Last Earnings Report?
A month has gone by since the last earnings report for United States Steel Corporation (X - Free Report) . Shares have lost about 9.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
U.S. Steel Posts Loss in Q1, Revenues Lag Estimates
U.S. Steel recorded a net loss of $180 million or $1.03 per share in the first quarter of 2017, narrower than a net loss of $340 million or $2.32 per share a year ago. The results in the reported quarter include unfavorable adjustments of $35 million or $0.20.
Barring one-time items, the loss came in at $0.83 per share for the reported quarter that missed the Zacks Consensus Estimate of earnings of $0.32.
Revenues rose roughly 16.4% year over year to $2,725 million in the first quarter, but trailed the Zacks Consensus Estimate of $2,921 million.
Segment Highlights
U.S. Steel’s Flat-Rolled segment recorded a loss of $90 million in the reported quarter against a loss of $188 million in the year-ago quarter. However, the results in the reported quarter declined significantly compared with previous quarter, mainly due to higher raw material costs, increased planned outage costs, lower results from mining operations, and restart costs related to the Granite City hot strip mill and Keetac iron ore mine.
The USSE segment posted a profit of $87 million in the reported quarter, improving from loss of $14 million recorded a year ago. The results improved due to increased average realized prices and a favorable first-in-first-out (FIFO) inventory impact. The benefits were partly offset by lower shipment volumes and higher raw material costs, particularly for coking coal and iron ore.
U.S. Steel’s Tubular segment registered a loss of $57 million in the quarter, lower than a loss of $64 million a year ago. First-quarter results improved due to higher prices, increased shipments, lower spending and the absence of an unfavorable adjustment for obsolete inventory taken in the fourth quarter. These benefits were partly offset by increased substrate costs.
Financials
U.S. Steel exited first-quarter 2017 with cash and cash equivalents of $1,326 million, almost a two-fold year-over-year increase from $705 million.
Long-term debt decreased 7.7% from previous quarter to $2,752 million. The company generated negative operating cash flow of $135 million for the three months period ended Mar 31, 2017.
Outlook
U.S. Steel noted that the market conditions have continued to improve. Concurrently, the company announced that it will focus on long-term and sustainable improvements in business model to remain a strong business partner that creates value for customers.
However, the company acknowledged that it remains exposed to a cyclical industry and aims to revitalize assets to achieve more reliable and consistent operations, improved quality and cost performance.
If market conditions remain at their current levels, U.S. Steel expects net earnings of around $260 million or $1.50 per share, and EBITDA (earnings before interest, tax, depreciation and amortization) of roughly $1.1 billion for 2017. The results for its Flat-Rolled, European and Tubular segments are anticipated to be higher than 2016.
The company believes market conditions to change in 2017 and it expects these changes to be reflected in adjusted EBITDA and net earnings.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 44.6% due to these changes.
United States Steel Corporation Price and Consensus
United States Steel Corporation Price and Consensus | United States Steel Corporation Quote
VGM Scores
At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.