U.S. Steel (X) to Report Q1 Earnings: What's in the Offing?
United States Steel Corporation X is scheduled to come up with its first-quarter 2023 results after the bell on Apr 27.
The company's earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, while missed once. U.S. Steel has a trailing-four quarter earnings surprise of 12%, on average. It delivered an earnings surprise of roughly 45% in the last reported quarter. Higher end-market demand, improved order entry and lower costs are likely to have aided its first-quarter results. However, lower year over year selling prices might have impacted performance.
Shares of U.S. Steel are down 23.3% over a year compared with the industry’s rise of 4.1%.
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Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
U.S. Steel, last month, issued its guidance for the first quarter. It envisions adjusted EBITDA for the quarter to be roughly $375 million. First-quarter adjusted earnings per share are expected between 58 cents and 63 cents.
The Zacks Consensus Estimate for revenues for U.S. Steel for the first quarter is currently pinned at $4,164 million, indicating a 20.4% year-over-year decline.
The Zacks Consensus Estimate for shipments for the company’s Flat-Rolled unit for the quarter currently stands at 2,006,000 tons, reflecting a 3% year-over-year rise. The consensus estimate for average realized price per ton in the unit stands at $975, suggesting a 28.7% year-over-year decrease.
The consensus estimate for shipments for the Mini Mill unit is pegged at 671,000 tons, suggesting a 32.7% year-over-year rise. The same for average realized price per ton for the unit stands at $716, reflecting a 47.8% year-over-year decline.
The Zacks Consensus Estimate for shipments for the U.S. Steel Europe segment is pegged at 890,000 tons, indicating a 19.8% year-over-year decline. The same for average realized price per ton for the unit stands at $836, calling for a 24.6% year-over-year decline.
For the Tubular segment, the consensus estimate for shipments is pegged at 134,000 tons, up 4.7% year over year. The same for average realized price per ton for the unit stands at $3,792, calling for an 61.4% year-over-year increase.
Some Factors at Play
U.S. Steel is expected to have benefited from improved order entry on higher demand in the March quarter. However, the company’s first-quarter results are likely to have been impacted by lower year over year selling prices in some of its segments.
U.S. Steel, in March, stated that it expects sequentially lower adjusted EBITDA in the Flat-Rolled segment in the first quarter while the Mini Mill segment is forecast to record positive adjusted EBITDA. The company’s European segment is expected to deliver negative EBITDA in the quarter to be reported.
Volumes in the Flat-Rolled segment is expected to have aided by improved demand in the March quarter. However, lower selling prices are likely to have weighed on the segment’s profitability. The results in the Europe unit are expected to have been affected by lower selling prices, offset by reduced energy costs and improved demand conditions. The Mini Mill unit is expected to have benefited from improved costs in the March quarter.
The Tubular segment is expected to have benefited from a healthy energy market demand and higher selling prices. The company expects the segment to witness improved adjusted EBITDA compared with the fourth quarter.
Meanwhile, U.S. steel prices rebounded in the first quarter after tumbling in the fourth quarter of 2022. The benchmark hot-rolled coil prices strengthened during the March quarter driven by U.S. steel mills’ price hike actions, low import levels, supply tightness partly due to mill outages and a recovery in demand.
Notwithstanding the recovery in steel prices, lower year over year average realized prices are likely to have hurt the company’s revenues and margins in the to-be-reported quarter.
United States Steel Corporation Price and EPS Surprise
United States Steel Corporation price-eps-surprise | United States Steel Corporation Quote
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 -0.38%. The Zacks Consensus Estimate for earnings for the first quarter is currently pegged at 62 cents. 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 #1.
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
FMC Corporation FMC, slated to release earnings on May 1, has an Earnings ESP of +0.86% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for FMC’s first-quarter earnings has been stable in the past 60 days. The Zacks Consensus Estimate for FMC’s earnings for the quarter is pegged at $1.74.
Axalta Coating Systems Ltd. AXTA, slated to release earnings on May 2, has an Earnings ESP of +4.35%.
The consensus estimate for Axalta Coating Systems’ earnings for the first quarter is currently pegged at 31 cents. AXTA currently carries a Zacks Rank #3.
Ternium S.A. TX, scheduled to release earnings on Apr 25, has an Earnings ESP of +10.85% and currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for TX’s first-quarter earnings has been revised 5.4% upward in the past 60 days. The consensus estimate for TX’s earnings for the first quarter is currently pegged at 98 cents.
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United States Steel Corporation (X) : Free Stock Analysis Report
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