U.S. Steel (X) to Report Q4 Earnings: What's in the Cards?
United States Steel Corporation X is scheduled to come up with its fourth-quarter 2023 results after the closing bell on Feb 1.
The company's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters at an average of 24.1%. It delivered an earnings surprise of roughly 21.7% in the last reported quarter. Weaker performance in the Flat-Rolled segment on lower volumes and selling prices is expected to have weighed on the company’s fourth-quarter results.
Shares of U.S. Steel are up 68.9% over a year compared with the industry’s rise of 5.8%.
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Let’s see how things are shaping up for this announcement.
Zacks Model
Our proven model predicts an earnings beat for U.S. Steel this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.
Earnings ESP: Earnings ESP for U.S. Steel is +0.26%. The Zacks Consensus Estimate for the fourth quarter is currently pegged at 25 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.
What do the Estimates Say?
U.S. Steel, last month, issued its guidance for the fourth quarter. It envisions adjusted EBITDA for the quarter to be nearly $250 million. Fourth-quarter adjusted earnings per share are expected in the range of 20-25 cents.
The Zacks Consensus Estimate for revenues for U.S. Steel for the fourth quarter is currently pinned at $3,702.1 million, indicating a 14.7% year-over-year decline.
Our estimate for consolidated shipments for the fourth quarter currently stands at 3,679,000 tons, reflecting a 2.2% decrease on a sequential basis.
Some Factors at Play
U.S. Steel’s fourth-quarter results are likely to have been impacted by weaker selling prices. The impacts of weaker prices and volumes are expected to reflect on the performance of the company’s Flat-Rolled unit.
U.S. steel prices rebounded during the fourth quarter with the benchmark hot-rolled coil (HRC) prices breaking above $1,000 per short ton in December, driven by U.S. steel mills’ price hike actions, supply tightness and a recovery in demand. The recovery is also being supported by the resolution to the United Auto Workers (UAW) strike. Notably, the UAW reached a deal with the Detroit Big Three in November 2023, ending the roughly six-week strike that weighed on the U.S. steel industry due to a slowdown in automotive demand.
Despite the rebound in HRC prices, weaker selling prices are likely to have hurt the company’s top line and margins in the quarter to be reported.
U.S. Steel, in December, stated that it expects fourth-quarter adjusted EBITDA for Flat-Rolled Segment to decline from third-quarter levels. The Mini Mill Segment's adjusted EBITDA is anticipated to be lower than the third quarter. The company’s European segment is projected to maintain adjusted EBITDA in line with third-quarter levels. Moreover, the Tubular unit is projected to witness slightly higher sequential adjusted EBITDA.
The Flat-Rolled segment is expected to have faced headwinds from lower volumes stemming from the idled blast furnace at Granite City Works and planned maintenance at other facilities in the fourth quarter. Sequentially weaker selling prices are likely to have affected the segment’s profitability. Our estimate for average realized price per ton in the Flat-Rolled unit stands at $951, suggesting an 8.2% sequential decline.
Lower selling prices are expected to have affected results in the Mini Mill unit in the December quarter. However, the impacts of lower raw material prices are likely to reflect on the segment’s performance. Our estimate for average realized price per ton for the unit is pegged at $788, reflecting a 12.5% decrease on a sequential basis.
The results in the Europe unit are expected to have been hurt by weaker selling prices. However, the unit is likely to have benefited from lower raw material costs and higher shipment volumes. Our estimate for average realized price per ton for the unit stands at $813, calling for a 4.6% sequential decline.
The Tubular segment is expected to have witnessed headwinds from lower selling prices, offset by increased shipment volumes. Our estimate for average realized price per ton for the unit stands at $2,448, calling for a 16.4% sequential decline.
United States Steel Corporation Price and EPS Surprise
United States Steel Corporation price-eps-surprise | United States Steel Corporation Quote
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:
Nutrien Ltd. NTR, scheduled to release earnings on Feb 21, has an Earnings ESP of +8.52% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for NTR’s earnings for the fourth quarter is currently pegged at 72 cents.
Agnico Eagle Mines Limited AEM, slated to release earnings on Feb 15, has an Earnings ESP of +8.23% and carries a Zacks Rank #3 at present.
The consensus mark for AEM’s fourth-quarter earnings is currently pegged at 46 cents.
Kinross Gold Corporation KGC, scheduled to release fourth-quarter earnings on Feb 14, has an Earnings ESP of +16.37%.
The Zacks Consensus Estimate for Kinross' earnings for the fourth quarter is currently pegged at 9 cents. KGC currently carries a Zacks Rank #3.
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United States Steel Corporation (X) : Free Stock Analysis Report
Kinross Gold Corporation (KGC) : Free Stock Analysis Report
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
Nutrien Ltd. (NTR) : Free Stock Analysis Report
