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U.S. Steel (X) Warms Up to Q2 Earnings: What's in the Cards?
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United States Steel Corporation (X - Free Report) is schedule to come up with its second-quarter 2018 results after the bell on Aug 1.
The steel giant swung to a profit in first-quarter 2018, backed by improved results across all three of its reportable segments. Adjusted earnings of 32 cents per share topped the Zacks Consensus Estimate of 29 cents.
Revenues rose roughly 16% year over year to $3,149 million in the quarter, also exceeding the Zacks Consensus Estimate of $3,100.5 million.
U.S. Steel has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 56.7%.
Shares of U.S. Steel have shot up around 57.5% over a year, significantly outperforming the industry’s growth of roughly 16.9%. Forecast-topping earnings performance in the last three quarters, upbeat outlook for 2018, the company’s efforts to improve its operations and cost structure and the Trump administration’s trade actions on imported steel have contributed to the run up in U.S. Steel’s shares.
Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.
Factors to Watch For
U.S. Steel, last month, said that it now expects EBITDA for 2018 to be at or near the top end of the earlier announced range of $1.7-$1.8 billion. It also reaffirmed its second-quarter EBITDA guidance of around $400 million.
The Zacks Consensus Estimate for revenues for U.S. Steel for the second quarter is $3,390 million, reflecting an expected increase of roughly 7.8% on a year over year basis.
Net sales for U.S. Steel’s Flat-Rolled segment is projected to see an 7.5% year over year increase as the Zacks Consensus Estimate for the second quarter is pegged at $2,412 million. The Zacks Consensus Estimate for net sales for the U.S. Steel Europe (USSE) unit is pegged at $861 million, reflecting a 14.5% rise from the year-ago quarter. Moreover, the company’s Tubular segment’s net sales for the second quarter are expected to surge 40.6% on a year over year basis, as the Zacks Consensus Estimate is $329 million.
With respect to pricing, the Zacks Consensus Estimate for average realized price for the Flat-Rolled unit for the second quarter is pegged at $819 per net ton, which represents an expected 10.4% rise from the year-ago quarter. The Zacks Consensus Estimate for average realized price for the USSE unit is $703 per net ton, representing an expected 13.4% rise on year over year basis. Average realized price for the Tubular segment is expected to increase around 25% year over year as the Zacks Consensus Estimate is $1,542 per net ton.
Steel prices have been rising in the United States on the back of the Trump administration’s trade actions to curb imports, reflected by the spike in hot-rolled steel prices. Higher steel prices drove the performance of U.S. Steel in the first quarter and the momentum is likely to continue in the second quarter.
U.S. Steel also remains focused on improving its cost structure and operations on a sustainable basis through its “Carnegie Way” initiative that includes actions such as manufacturing process/logistics improvements and savings on SG&A costs.
As part of the Carnegie Way initiative, the company is implementing an asset revitalization plan aimed at improving its profitability and competitiveness. Carnegie Way actions are expected to deliver meaningful benefits in 2018.
However, the company is facing certain operational challenges at its steelmaking facility at Great Lakes Works and expects this to unfavorably impact EBITDA by roughly $30 million in the second quarter. The company also expects to record a charge of $20-$25 million in the second quarter related to the restart of its Granite City Works facility.
United States Steel Corporation Price and EPS Surprise
Our proven model does not conclusively show that U.S. Steel is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:
Zacks ESP: The Earnings ESP for U.S. Steel is -1.24% as the Most Accurate Estimate stands at $1.13 while the Zacks Consensus Estimate is pegged at $1.15. 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, which when combined with a negative ESP, makes surprise prediction difficult.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
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:
Orion Engineered Carbons, S.A. (OEC - Free Report) has an Earnings ESP of +3.85% and sports a Zacks Rank #2.
The Chemours Company (CC - Free Report) has an Earnings ESP of +2.38% and carries a Zacks Rank #3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
U.S. Steel (X) Warms Up to Q2 Earnings: What's in the Cards?
United States Steel Corporation (X - Free Report) is schedule to come up with its second-quarter 2018 results after the bell on Aug 1.
The steel giant swung to a profit in first-quarter 2018, backed by improved results across all three of its reportable segments. Adjusted earnings of 32 cents per share topped the Zacks Consensus Estimate of 29 cents.
Revenues rose roughly 16% year over year to $3,149 million in the quarter, also exceeding the Zacks Consensus Estimate of $3,100.5 million.
U.S. Steel has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 56.7%.
Shares of U.S. Steel have shot up around 57.5% over a year, significantly outperforming the industry’s growth of roughly 16.9%. Forecast-topping earnings performance in the last three quarters, upbeat outlook for 2018, the company’s efforts to improve its operations and cost structure and the Trump administration’s trade actions on imported steel have contributed to the run up in U.S. Steel’s shares.
Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.
Factors to Watch For
U.S. Steel, last month, said that it now expects EBITDA for 2018 to be at or near the top end of the earlier announced range of $1.7-$1.8 billion. It also reaffirmed its second-quarter EBITDA guidance of around $400 million.
The Zacks Consensus Estimate for revenues for U.S. Steel for the second quarter is $3,390 million, reflecting an expected increase of roughly 7.8% on a year over year basis.
Net sales for U.S. Steel’s Flat-Rolled segment is projected to see an 7.5% year over year increase as the Zacks Consensus Estimate for the second quarter is pegged at $2,412 million. The Zacks Consensus Estimate for net sales for the U.S. Steel Europe (USSE) unit is pegged at $861 million, reflecting a 14.5% rise from the year-ago quarter. Moreover, the company’s Tubular segment’s net sales for the second quarter are expected to surge 40.6% on a year over year basis, as the Zacks Consensus Estimate is $329 million.
With respect to pricing, the Zacks Consensus Estimate for average realized price for the Flat-Rolled unit for the second quarter is pegged at $819 per net ton, which represents an expected 10.4% rise from the year-ago quarter. The Zacks Consensus Estimate for average realized price for the USSE unit is $703 per net ton, representing an expected 13.4% rise on year over year basis. Average realized price for the Tubular segment is expected to increase around 25% year over year as the Zacks Consensus Estimate is $1,542 per net ton.
Steel prices have been rising in the United States on the back of the Trump administration’s trade actions to curb imports, reflected by the spike in hot-rolled steel prices. Higher steel prices drove the performance of U.S. Steel in the first quarter and the momentum is likely to continue in the second quarter.
U.S. Steel also remains focused on improving its cost structure and operations on a sustainable basis through its “Carnegie Way” initiative that includes actions such as manufacturing process/logistics improvements and savings on SG&A costs.
As part of the Carnegie Way initiative, the company is implementing an asset revitalization plan aimed at improving its profitability and competitiveness. Carnegie Way actions are expected to deliver meaningful benefits in 2018.
However, the company is facing certain operational challenges at its steelmaking facility at Great Lakes Works and expects this to unfavorably impact EBITDA by roughly $30 million in the second quarter. The company also expects to record a charge of $20-$25 million in the second quarter related to the restart of its Granite City Works facility.
United States Steel Corporation Price and EPS Surprise
United States Steel Corporation price-eps-surprise | United States Steel Corporation Quote
Earnings Whispers
Our proven model does not conclusively show that U.S. Steel is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:
Zacks ESP: The Earnings ESP for U.S. Steel is -1.24% as the Most Accurate Estimate stands at $1.13 while the Zacks Consensus Estimate is pegged at $1.15. 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, which when combined with a negative ESP, makes surprise prediction difficult.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
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:
Domtar Corporation has an Earnings ESP of +1.70% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Orion Engineered Carbons, S.A. (OEC - Free Report) has an Earnings ESP of +3.85% and sports a Zacks Rank #2.
The Chemours Company (CC - Free Report) has an Earnings ESP of +2.38% and carries a Zacks Rank #3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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