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United States Steel (X) Up 26.7% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for United States Steel Corporation ((X - Free Report) . Shares have added about 26.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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's Q4 Earnings Crush Estimates, Sales Miss
U.S. Steel recorded net loss of $105 million or $0.61 per share in the fourth quarter of 2016, narrower than a net loss of $1.1 billion or $7.74 per share a year ago. The results in the reported quarter include unfavorable adjustments of $152 million.
Barring one-time items, earnings were $0.27 per share for the reported quarter that outstripped the Zacks Consensus Estimate of a $0.01 per share.
Revenues rose roughly 3% year over year to $2,650 million in the fourth quarter, but trailed the Zacks Consensus Estimate of $2,666 million.
For full-year 2016, the company registered a net loss of $440 million or $2.81 per share, lower than a net loss of $1.6 billion or $11.24 per share a year ago. The results improved as the company gained from its efforts to improve its cost structure through its ‘Carnegie Way’ initiatives amid a challenging operating environment.
Sales for the full year slipped roughly 11% year over year to $10,261 million.
Segment Highlights
U.S. Steel’s Flat-Rolled segment recorded a profit of $65 million in the reported quarter against a loss of $88 million in the year-ago quarter. However, the results in the reported quarter declined on a sequential basis due to lower average realized prices, reduced shipments and higher outage spending.
The USSE segment posted a profit of $63 million in the reported quarter, higher than $6 million recorded a year ago. The results, however, declined from third-quarter 2016 due to higher raw material costs, in particular, for coking coal and iron units.
U.S. Steel’s Tubular segment registered a loss of $87 million in the quarter, wider than a loss of $64 million a year ago. Fourth-quarter results declined compared with the third quarter, mostly due to an unfavorable adjustment for obsolete inventory associated with the downturn in the energy markets.
Financials
U.S. Steel exited 2016 with cash and cash equivalents of $1,515 million, a twofold year-over-year increase. Long-term debt decreased 4% year over year to $2,981 million. The company generated operating cash flow of $727 million for 2016.
Outlook
U.S. Steel noted that it has entered 2017 with improved market conditions than what it had faced at the onset of 2016. However, market conditions still remain volatile. The company said that it will focus on improving its assets and operating performance and driving innovation that creates differentiated solutions for its customers.
If market conditions remain at their current levels, the company expects net earnings of around $535 million or $3.08 per share, and EBITDA of roughly $1.3 billion for 2017. The results for its Flat-Rolled, European and Tubular segments are anticipated to be higher than 2016.
U.S. Steel expects to be cash positive for 2017, mainly due to improved cash from operations. The company forecasts results for other businesses to be comparable year over year and also sees around $50 million of post-retirement benefit expense.
The company anticipates the market conditions to change, and as changes occur during 2017, its net earnings and adjusted EBITDA should change consistent with the pace and magnitude of changes in market conditions.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted by 61.81% due to these changes.
United States Steel Corporation Price and Consensus
At this time, United States Steel's stock has a nice Growth Score of 'B', however its Momentum is doing a bit better with an 'A'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for growth and to a lesser degree value.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of this revision looks promising. Notably, the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.
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United States Steel (X) Up 26.7% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for United States Steel Corporation ((X - Free Report) . Shares have added about 26.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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's Q4 Earnings Crush Estimates, Sales Miss
U.S. Steel recorded net loss of $105 million or $0.61 per share in the fourth quarter of 2016, narrower than a net loss of $1.1 billion or $7.74 per share a year ago. The results in the reported quarter include unfavorable adjustments of $152 million.
Barring one-time items, earnings were $0.27 per share for the reported quarter that outstripped the Zacks Consensus Estimate of a $0.01 per share.
Revenues rose roughly 3% year over year to $2,650 million in the fourth quarter, but trailed the Zacks Consensus Estimate of $2,666 million.
For full-year 2016, the company registered a net loss of $440 million or $2.81 per share, lower than a net loss of $1.6 billion or $11.24 per share a year ago. The results improved as the company gained from its efforts to improve its cost structure through its ‘Carnegie Way’ initiatives amid a challenging operating environment.
Sales for the full year slipped roughly 11% year over year to $10,261 million.
Segment Highlights
U.S. Steel’s Flat-Rolled segment recorded a profit of $65 million in the reported quarter against a loss of $88 million in the year-ago quarter. However, the results in the reported quarter declined on a sequential basis due to lower average realized prices, reduced shipments and higher outage spending.
The USSE segment posted a profit of $63 million in the reported quarter, higher than $6 million recorded a year ago. The results, however, declined from third-quarter 2016 due to higher raw material costs, in particular, for coking coal and iron units.
U.S. Steel’s Tubular segment registered a loss of $87 million in the quarter, wider than a loss of $64 million a year ago. Fourth-quarter results declined compared with the third quarter, mostly due to an unfavorable adjustment for obsolete inventory associated with the downturn in the energy markets.
Financials
U.S. Steel exited 2016 with cash and cash equivalents of $1,515 million, a twofold year-over-year increase. Long-term debt decreased 4% year over year to $2,981 million. The company generated operating cash flow of $727 million for 2016.
Outlook
U.S. Steel noted that it has entered 2017 with improved market conditions than what it had faced at the onset of 2016. However, market conditions still remain volatile. The company said that it will focus on improving its assets and operating performance and driving innovation that creates differentiated solutions for its customers.
If market conditions remain at their current levels, the company expects net earnings of around $535 million or $3.08 per share, and EBITDA of roughly $1.3 billion for 2017. The results for its Flat-Rolled, European and Tubular segments are anticipated to be higher than 2016.
U.S. Steel expects to be cash positive for 2017, mainly due to improved cash from operations. The company forecasts results for other businesses to be comparable year over year and also sees around $50 million of post-retirement benefit expense.
The company anticipates the market conditions to change, and as changes occur during 2017, its net earnings and adjusted EBITDA should change consistent with the pace and magnitude of changes in market conditions.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted by 61.81% 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, United States Steel's stock has a nice Growth Score of 'B', however its Momentum is doing a bit better with an 'A'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for growth and to a lesser degree value.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of this revision looks promising. Notably, the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.