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 2022 results after the bell on Feb 2.
The company surpassed the Zacks Consensus Estimate in two of the trailing four quarters, while missed twice. U.S. Steel has a trailing-four quarter negative earnings surprise of 4.3%, on average. It delivered an earnings surprise of roughly 1.6% in the last reported quarter. Weaker end-market demand, higher input costs and lower steel prices are likely to have hurt its fourth-quarter results.
Shares of U.S. Steel are up 39.1% over a year compared with the industry’s rise of 27.1%.
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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 fourth quarter. It envisions adjusted EBITDA of roughly $375 million for the quarter. Fourth-quarter adjusted earnings per share are projected between 58 cents and 63 cents.
The Zacks Consensus Estimate for revenues for U.S. Steel for the fourth quarter is currently pinned at $3,953 million, indicating a 29.7% year-over-year decline.
The Zacks Consensus Estimate for shipments for the company’s Flat-Rolled unit for the quarter currently stands at 2,137,000 tons, reflecting a 5.2% year-over-year rise. The consensus estimate for average realized price per ton in the unit stands at $1,127, suggesting a 21.3% year-over-year decrease.
The consensus estimate for shipments for the Mini Mill unit is pegged at 576,000 tons, suggesting a 3.9% year-over-year rise. The same for average realized price per ton for the unit stands at $1,136, reflecting a 23.8% year-over-year decline.
The Zacks Consensus Estimate for shipments for the U.S. Steel Europe segment is pegged at 858,000 tons, indicating a 16.5% year-over-year decline. The same for average realized price per ton for the unit stands at $696, calling for an 35.3% year-over-year decline.
For the Tubular segment, the consensus estimate for shipments is pegged at 127,000 tons, flat year over year. The same for average realized price per ton for the unit stands at $2,186, calling for an 11% year-over-year increase.
Some Factors at Play
The company’s fourth-quarter results are likely to have been affected by softer demand, customer destocking and lower selling prices across Flat-Rolled, Mini Mill and U.S. Steel Europe segments.
U.S. Steel, in December, stated that it expects sequentially lower adjusted EBITDA across its Flat-Rolled and U.S. Steel Europe segments in the fourth quarter while the Mini Mill segment is forecast to register negative adjusted EBITDA.
Volumes in the Flat-Rolled segment are expected to have hurt by weaker demand and lower steel selling prices in the December quarter. The results in the Europe unit are expected to have been affected by lower selling prices, higher input and energy costs and demand headwinds. The Mini Mill unit is likely to have faced headwinds from lower selling prices and high raw material costs in the fourth quarter.
On a positive note, 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 third quarter.
U.S. steel prices tumbled after surging to roughly $1,500 per short ton in April 2022 due to supply concerns stemming from the Russia-Ukraine war. The benchmark hot-rolled coil (HRC) prices tumbled to near the $600 per short ton level in November 2022. The downward drift partly reflects weaker demand. Fears of a recession have also impacted 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
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 -15.35%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at 60 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 #3 (Hold).
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:
Yamana Gold Inc. AUY, expected to release earnings on Feb 16, has an Earnings ESP of +8.33% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Yamana Gold’s fourth-quarter earnings has been revised 20% upward in the past 60 days. The Zacks Consensus Estimate for AUY’s earnings for the quarter is pegged at 6 cents.
Quaker Chemical Corporation KWR, expected to release earnings on Feb 23, has an Earnings ESP of +7.38%.
The Zacks Consensus Estimate for Quaker Chemical’s fourth-quarter earnings is currently pegged at $1.22. KWR currently carries a Zacks Rank #1.
Teck Resources Limited TECK, scheduled to release earnings on Feb 21, has an Earnings ESP of +3.48%.
The Zacks Consensus Estimate for Teck Resources’ fourth-quarter earnings is currently pegged at 94 cents. TECK currently carries a Zacks Rank #2.
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