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U.S. Steel Declares Senior Secured Notes Offering Due 2025

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United States Steel Corporation (X - Free Report) stated that it has initiated an offering of $700 million total principal amount of senior secured notes due 2025, which are subject to market conditions.

The company plans to employ the net proceeds from the offering to boost liquidity, strengthen balance sheet as well as for general corporate purposes. Further, the company stated that the notes will be unconditionally and fully guaranteed on a senior secured basis by all of its subsidiaries, except for certain excluded subsidiaries.  

U.S. Steel ended the first quarter with cash and cash equivalents of $1,350 million, up 144% year over year. Its long-term debt rose 98.5% year over year to $4,616 million.

Shares of U.S. Steel have plunged 46.8% in the past year compared with the industry’s 35.5% decline.

U.S. Steel’s adjusted loss per share of 73 cents in the first quarter was narrower than the Zacks Consensus Estimate of a loss of 80 cents.

During first-quarter 2020, the company adjusted its footprint, strengthened its balance sheet and aggressively cut costs amid the impacts of the coronavirus pandemic as well as volatility in the oil and gas markets. These actions helped the company surpass its first-quarter view.

Also, the company granted Stelco an option to purchase a 25% stake in its Minntac iron ore mining operations for purchase price of $600 million. Notably, the move showcases the consistent execution of its strategy and delivers $100 million of incremental cash to the balance sheet in 2020. The transaction will enable U.S. Steel to record an additional $500 million of capital to support its strategy.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Agnico Eagle Mines Limited (AEM - Free Report) , The Scotts Miracle-Gro Company (SMG - Free Report) and Barrick Gold Corporation (GOLD - Free Report) , all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Agnico Eagle has an expected earnings growth rate of 75.3% for 2020. The company’s shares have surged 66.2% in the past year.

Scotts Miracle-Gro has an expected earnings growth rate of 17.7% for fiscal 2020. Its shares have returned 58.5% in the past year.    

Barrick has an expected earnings growth rate of 64.7% for 2020. The company’s shares have surged 131.9% in the past year.

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