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U.S. Steel (X) to Post Q3 Earnings: What's in the Cards?

United States Steel Corporation X is scheduled to come up with its third-quarter 2021 results after the bell on Oct 28. Strong end-market demand and higher steel prices are likely to have supported its third-quarter results. The company is also expected to have benefited from its actions to improve cost and operating performance in the quarter.

The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 25.1%. It delivered an earnings surprise of roughly 6.7% in the last reported quarter.

Shares of U.S. Steel are up 138.1% over a year compared with the industry’s rise of 79.5%.

 

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What do the Estimates Say?

U.S. Steel, last month, issued its guidance for the third quarter. It envisions adjusted EBITDA of around $2 billion for the quarter, which suggests an increase from the second quarter’s figure of roughly $1.3 billion.

The Zacks Consensus Estimate for revenues for U.S. Steel for the third quarter is currently pinned at $5,725 million, indicating a 144.7% year-over-year rise.

Moreover, the Zacks Consensus Estimate for shipments for the company’s Flat-Rolled unit for the quarter currently stands at 2,361,000 tons, reflecting a 9.6% year-over-year rise. The consensus estimate for average realized price per ton in the unit stands at $1,271, suggesting a 78.5% year-over-year increase.

The consensus estimate for shipments for the Mini Mill unit is pegged at 696,000 tons, suggesting a 13% sequential rise. The same for average realized price per ton in the unit stands at $1,271, reflecting a 22.5% sequential increase.

The Zacks Consensus Estimate for shipments for U.S. Steel Europe segment is pegged at 1,126,000 tons, indicating a 42.5% year-over-year rise. The same for average realized price per ton in the unit stands at $977, calling for a 60.9% year-over-year increase.

For the Tubular segment, the consensus estimate for shipments is pegged at 120,000 tons, reflecting a 69% year-over-year rise. The same for average realized price per ton in the unit stands at $1,748, calling for a 42.1% year-over-year increase.

Some Factors at Play

The company’s third-quarter results are likely to have benefited from strong demand across end markets, higher domestic steel prices and its efforts to improve operation efficiency and reduce costs.

U.S. Steel, in September, said that it expects record third-quarter results driven by its Best for All business model, strong reliability and quality performance, persistent customer demand as well as sustained rise in steel selling prices.

Higher steel selling prices and strong customer demand are expected to have driven margins in its Flat-rolled segment in the to-be-reported quarter. Higher prices and operating efficiencies are also likely to have aided performance in the Mini Mill segment. The U.S. Steel Europe segment is also expected to have benefited from strong steel demand and higher steel prices in the third quarter. The Tubular segment is also expected to have gained from higher prices and volumes.

U.S. steel prices have witnessed a significant upswing driven by an upturn in demand and supply shortages. Prices have hit record levels after plunging to pandemic-induced multi-year lows in August 2020. The benchmark hot-rolled coil (“HRC”) prices started to recover in September 2020, and the bull run continues this year. HRC prices shot past the $1,900 per short ton level in August 2021 and remained above that level through September amid tight supply and robust demand. Higher domestic steel prices are likely to have boosted the company’s selling prices and supported its bottom line in the to-be-reported quarter.

 

 

Zacks Model

Our proven model does not conclusively predict an earnings beat for U.S. Steel this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for U.S. Steel is -8.51%. The Zacks Consensus Estimate for earnings for the third quarter is currently pegged at $4.85. 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.

Stocks That Warrant a Look

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:

Tronox Holdings plc TROX, scheduled to release earnings on Oct 27, has an Earnings ESP of +0.38% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Chemours Company CC, scheduled to release earnings on Nov 4, has an Earnings ESP of +5.70% and carries a Zacks Rank #2.

Albemarle Corporation ALB, scheduled to release earnings on Nov 3, has an Earnings ESP of +8.73% and carries a Zacks Rank #3.


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United States Steel Corporation (X): Free Stock Analysis Report
 
Albemarle Corporation (ALB): Free Stock Analysis Report
 
Tronox Holdings PLC (TROX): Free Stock Analysis Report
 
The Chemours Company (CC): Free Stock Analysis Report
 
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