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U.S. Steel (X) to Post Q1 Earnings: What's in the Offing?

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United States Steel Corporation (X - Free Report) is scheduled to come up with its first-quarter 2020 results after the bell on Apr 30. The impacts of weaker U.S. steel prices, weakness in the company’s Tubular unit and some demand softness due to the coronavirus pandemic are likely to reflect on first-quarter results. However, the company is likely to have benefited from its actions to improve cost and operating performance in the quarter.

U.S. Steel beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. In this timeframe, the company delivered an average positive surprise of roughly 65.1%.

Shares of U.S. Steel are down 53.9% over a year, compared with the industry’s decline of 43.9%.


 

Let’s see how things are shaping up for this announcement.

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 +0.34%. The Zacks Consensus Estimate for the first quarter is currently pegged at a loss of 80 cents. 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 #3.

What do the Estimates Say?

U.S. Steel, last month, issued its guidance for the first quarter. It expects adjusted loss per share for the quarter to be roughly 80 cents. This compares to adjusted earnings of 47 cents a share the company recorded a year ago. The company also projects adjusted EBITDA of around $30 million for the first quarter.

The Zacks Consensus Estimate for revenues for U.S. Steel for the first quarter is $2,776 million, suggesting a decline of 20.7% on a year-over-year basis.

Some Factors at Play

Benefits of the company’s actions to improve its cost structure and operations as well as investments in its assets are expected to get reflected on first-quarter results. These actions coupled with healthy shipment volumes are likely to have supported results in the company’s Flat-Rolled segment.

However, the company is witnessing challenging conditions in its Tubular business as oil prices remain considerably under pressure. Lower demand amid a slump in crude oil prices is likely to have hurt its Tubular unit in the March quarter.

Softer domestic steel prices may also have weighed on U.S. Steel’s performance in the quarter to be reported. The coronavirus outbreak led to a downward spiral in U.S. steel prices due to weak demand across major end-use markets like automotive and construction. Coronavirus-led lockdowns crippled industrial activities globally during the first quarter, hurting demand for steel.

After gaining some upward momentum in late 2019, U.S. steel prices came under pressure during the first quarter amid the virus crisis. The benchmark hot-rolled coil steel prices tracked downward amid worries over the fast-growing coronavirus pandemic in the United States and demand slowdown. Weaker prices are likely to have put downward pressure on U.S. Steel’s selling prices and hurt its sales and margins in the first 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 Poised to Beat Estimates

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

The Scotts Miracle-Gro Company (SMG - Free Report) , scheduled to release earnings on May 6, has an Earnings ESP of +1.49% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Franco-Nevada Corporation (FNV - Free Report) , scheduled to release earnings on May 6, has an Earnings ESP of +1.38% and carries a Zacks Rank #2.

Yamana Gold Inc. (AUY - Free Report) , scheduled to release earnings on Apr 30, has an Earnings ESP of +12.50% and carries a Zacks Rank #3.

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