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U.S. Steel (X) Earnings and Revenues Beat Estimates in Q2

Zacks Equity Research

United States Steel Corporation X slipped to a net loss of $589 million or $3.36 per share in second-quarter 2020 from net earnings of $68 million or 39 cents per share in the year-ago quarter.

Barring one-time items, adjusted loss per share was $2.67 against adjusted earnings per share of 45 cents in the prior-year quarter. The figure was narrower than the Zacks Consensus Estimate of a loss of $2.74.

Revenues fell 41% year over year to $2,091 million in the reported quarter. However, the top line beat the Zacks Consensus Estimate of $1,690.7 million.

Results in the second quarter were affected by the coronavirus pandemic and costs associated with idling of a significant portion of the company’s steelmaking operations.

United States Steel Corporation Price, Consensus and EPS Surprise

 

United States Steel Corporation Price, Consensus and EPS Surprise
United States Steel Corporation Price, Consensus and EPS Surprise

United States Steel Corporation price-consensus-eps-surprise-chart | United States Steel Corporation Quote

 

Segment Highlights

Flat-Rolled: The segment recorded a loss of $329 million in the second quarter against earnings of $134 million in the year-ago quarter.

Steel shipments in the segment fell around 36% year over year to 1,790,000 tons and average realized price per ton in the unit was $721, down roughly 7% year over year.

U.S. Steel Europe: The segment posted a loss of $26 million, wider than a loss of $10 million in the year-ago quarter. Shipments in the segment dropped around 39% year over year to 601,000 tons. Average realized price per ton for the unit was $632, down roughly 3% year over year.

Tubular: The segments posted a loss of $47 million, wider than a loss of $6 million in the year-ago quarter.

Steel shipments declined roughly 32% year over year to 132,000 tons. Average realized price per ton for the unit was $1,288, down around 15% year over year.

Financials

U.S. Steel ended the quarter with cash and cash equivalents of $2,300 million, a more than three-fold year-over-year increase. Long-term debt rose roughly 135% year over year to $5,505 million.

Outlook

Moving ahead, U.S. Steel said that it is encouraged by the recovery in market conditions as automotive original equipment manufacturers are approaching normal production levels and healthy order activity has continued into the third quarter. The company also expects construction demand to remain strong, especially for value-add construction products.

U.S. Steel has also restarted two blast furnaces to rapidly respond to increasing activity and intends to restart an additional furnace at Gary Works on Aug 1. While the company is encouraged by the rising pace of incoming orders across its steelmaking and sheet finishing facilities, it expects a portion of operating inefficiencies to continue to affect performance in the third quarter.

Price Performance

The company’s shares are down 51% in the past a year compared with the industry’s 19.6% decline.

 

 

Zacks Rank & Key Picks

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

Better-ranked stocks worth considering in the basic materials space include Royal Gold, Inc. RGLD, Equinox Gold Corp. EQX and Kinross Gold Corporation KGC.

Royal Gold has a projected earnings growth rate of 62.1% for the current year. The company’s shares have gained around 19% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Equinox Gold has a projected earnings growth rate of 255.2% for the current year. The company’s shares have rallied roughly 94% in a year. It currently carries a Zacks Rank #2 (Buy).

Kinross Gold has an expected earnings growth rate of 85.3% for the current year. The company’s shares have shot up around 116% in the past year. It presently carries a Zacks Rank #2.

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