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U.S. Steel Poised on Carnegie Way Initiatives, Auto Demand
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We issued an updated research report on United States Steel Corporation (X - Free Report) on Nov 21.
U.S. Steel reported net earnings of $147 million or 83 cents per share in third-quarter 2017, compared with $51 million or 32 cents recorded a year ago. Barring one-time items, earnings came in at 92 cents per share for the reported quarter that surpassed the Zacks Consensus Estimate of earnings of 67 cents.
Net sales rose roughly 20.9% year over year to $3,248 million in the quarter, also topping the Zacks Consensus Estimate of $3,042 million.
U.S. Steel’s shares have moved up 13.1% in the last three months, outperforming the industry’s 0.8% gain.
U.S. Steel, during third-quarter 2017 earnings call, said that it remains focused on revitalizing assets and improving costs. The company is witnessing operating improvements in the assets in which it is investing, which makes it reasonably confident to achieve the 2020 improvement targets.
For 2017, U.S. Steel expects net earnings of around $323 million or $1.83 per share, adjusted net earnings of roughly $300 million or $1.70 per share and EBITDA (earnings before interest, tax, depreciation and amortization) of roughly $1.075 billion, considering market conditions at their current levels.
U.S. Steel is actively engaged in 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. The company sees incremental impact from Carnegie Way benefits of $440 million for the full year as compared with 2016.
The company also is witnessing robust demand in the automotive space. It sees substantial opportunities in the automotive market and remains focused on bringing more products in this key market.
In September 2017, U.S. Steel and Japan’s Kobe Steel agreed to start construction of a new continuous galvanizing line at their subsidiaries’ joint venture, Pro-Tec Coating Company in Leipsic, OH. The move is in response to growing demand for advanced high-strength steels. The new line, involving an investment of around $400 million, will use a proprietary process for coating steel that will help automakers make economically lightweight vehicles to meet increasing fuel efficiency requirements and maintain high safety standards. The new continuous galvanizing line will have annual capacity of 500,000 tons and construction is expected to start in fourth-quarter 2017 while line is expected to begin startup in 2019.
While U.S. Steel’s Flat-Rolled division posted healthy results in the third quarter, the company is still facing certain operational issues in this unit. Increased outage and plant maintenance costs are affecting this division. The company sees maintenance and outage expenses (including those related to asset revitalization) of around $1.3 billion for the Flat-Rolled unit for 2017, higher than $950 million in 2016.
The U.S. steel industry also remains under the risk of cheaper imports despite some favorable developments on the import front in the recent past (in the form of imposition of heavy tariffs on imports). Unfairly-traded, subsidized imports are still flowing into the American market due to foreign producers' overcapacity.
United States Steel Corporation Price and Consensus
Koppers has an expected long-term earnings growth rate of 18%. Its shares have moved up 22.7% year to date.
Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have rallied 139.9% year to date.
Kronos Worldwide has an expected long-term earnings growth rate of 5%. Its shares have surged a whopping 142.6% year to date.
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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U.S. Steel Poised on Carnegie Way Initiatives, Auto Demand
We issued an updated research report on United States Steel Corporation (X - Free Report) on Nov 21.
U.S. Steel reported net earnings of $147 million or 83 cents per share in third-quarter 2017, compared with $51 million or 32 cents recorded a year ago. Barring one-time items, earnings came in at 92 cents per share for the reported quarter that surpassed the Zacks Consensus Estimate of earnings of 67 cents.
Net sales rose roughly 20.9% year over year to $3,248 million in the quarter, also topping the Zacks Consensus Estimate of $3,042 million.
U.S. Steel’s shares have moved up 13.1% in the last three months, outperforming the industry’s 0.8% gain.
U.S. Steel, during third-quarter 2017 earnings call, said that it remains focused on revitalizing assets and improving costs. The company is witnessing operating improvements in the assets in which it is investing, which makes it reasonably confident to achieve the 2020 improvement targets.
For 2017, U.S. Steel expects net earnings of around $323 million or $1.83 per share, adjusted net earnings of roughly $300 million or $1.70 per share and EBITDA (earnings before interest, tax, depreciation and amortization) of roughly $1.075 billion, considering market conditions at their current levels.
U.S. Steel is actively engaged in 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. The company sees incremental impact from Carnegie Way benefits of $440 million for the full year as compared with 2016.
The company also is witnessing robust demand in the automotive space. It sees substantial opportunities in the automotive market and remains focused on bringing more products in this key market.
In September 2017, U.S. Steel and Japan’s Kobe Steel agreed to start construction of a new continuous galvanizing line at their subsidiaries’ joint venture, Pro-Tec Coating Company in Leipsic, OH. The move is in response to growing demand for advanced high-strength steels. The new line, involving an investment of around $400 million, will use a proprietary process for coating steel that will help automakers make economically lightweight vehicles to meet increasing fuel efficiency requirements and maintain high safety standards. The new continuous galvanizing line will have annual capacity of 500,000 tons and construction is expected to start in fourth-quarter 2017 while line is expected to begin startup in 2019.
While U.S. Steel’s Flat-Rolled division posted healthy results in the third quarter, the company is still facing certain operational issues in this unit. Increased outage and plant maintenance costs are affecting this division. The company sees maintenance and outage expenses (including those related to asset revitalization) of around $1.3 billion for the Flat-Rolled unit for 2017, higher than $950 million in 2016.
The U.S. steel industry also remains under the risk of cheaper imports despite some favorable developments on the import front in the recent past (in the form of imposition of heavy tariffs on imports). Unfairly-traded, subsidized imports are still flowing into the American market due to foreign producers' overcapacity.
United States Steel Corporation Price and Consensus
United States Steel Corporation Price and Consensus | United States Steel Corporation Quote
Zacks Rank & Stocks to Consider
U.S. steel currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Koppers Holdings Inc. (KOP - Free Report) , Daqo New Energy Corp. (DQ - Free Report) and Kronos Worldwide Inc. (KRO - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Koppers has an expected long-term earnings growth rate of 18%. Its shares have moved up 22.7% year to date.
Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have rallied 139.9% year to date.
Kronos Worldwide has an expected long-term earnings growth rate of 5%. Its shares have surged a whopping 142.6% year to date.
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.
Click for details >>