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U.S. Steel (X) Anticipates Sequentially Narrower Loss in Q4

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Zacks Equity Research
·3 min read
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United States Steel Corporation X issued its guidance for fourth-quarter 2020.

The company projects adjusted EBITDA to be around $55 million for the fourth quarter. Adjusted loss per share is expected to be around 85 cents. The guided figure is narrower than the loss per share of $1.21 in the third quarter. The company had reported a loss of 64 cents per share in the prior-year quarter.

U.S. Steel witnessed improvement in flat-rolled demand in the United States and Europe during the fourth quarter backed by end-markets such as automotive, appliance and packaging. The flow-through of higher steel prices, improved operations and cost saving initiatives are driving performance in the ongoing month.

The Flat-rolled segment is expected to generate positive EBITDA in the fourth-quarter on the back of strong order levels and higher steel prices. Based on this momentum, U.S. Steel decided to restart blast furnace #4 at Gary Works and iron ore production at its Keetac mine to meet customer demand. Efforts to improve operation efficiency will also drive results this year.

Strong demand in the Europe market along with improved commercial performance and focus on cost management is expected to offset raw material headwinds from higher iron ore prices. The segment’s fourth quarter results are expected to come in higher compared with third-quarter levels.

In Tubular, although customer activity is still limited, the in-sourcing of rounds production is boosting the segment’s cost structure in the fourth quarter.

Per the company, longer lead time, higher utilization rates, and higher input costs indicate healthy steel demand is likely to sustain in the next year. The company is thus expecting improved financial performance in 2021.

Shares of U.S. Steel have surged 47.2% in the past year compared with 17.1% rise of the industry.

Zacks Rank & Key Picks

United Steel currently sports a Zacks Rank #3 (Hold).

Some other better-ranked stocks worth considering in the basic materials space are Bunge Limited BG, BHP Group BHP and Clearwater Paper Corporation CLW.

Bunge has a projected earnings growth rate of 43% for the current year. The company’s shares have gained around 13.8% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BHP has an expected earnings growth rate of around 32.4% for the current year. The company’s shares have gained around 20.3% in the past year. It currently flaunts a Zacks Rank #1.

Clearwater has an expected earnings growth rate of 1,960.9% for the current year. The company’s shares have surged around 63.5% in the past year. It currently carries a Zacks Rank #2 (Buy).

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United States Steel Corporation (X) : Free Stock Analysis Report
 
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Bunge Limited (BG) : Free Stock Analysis Report
 
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