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U.S. Steel (X) Updates Outlook for Q3, Trims Loss Guidance

Zacks Equity Research

United States Steel Corporation X said yesterday that it now expects to record adjusted loss in the band of 20-26 cents per share for the third quarter of 2019.

The revised view for the quarter is better than the downbeat guidance the Pittsburgh-based steel maker had issued last month. Earlier, the company had said that it expects to register adjusted loss per share of roughly 35 cents for the third quarter.

The company’s updated guidance for the quarter is also better than expected. The Zacks Consensus Estimate for the third quarter is currently pegged at a loss of 35 cents per share.

Moreover, U.S. Steel now envisions adjusted EBITDA for the third quarter to be in the range of $134-$144 million, higher than its previous expectations of $115 million. The projected figure excludes roughly $9 million of estimated impacts from the fire at the company’s Clairton coke making facility in December 2018 as well as estimated restructuring charges of around $54 million.

The company attributed the improved outlook to better-than-expected manufacturing performance in its Flat-rolled division, stronger shipments and a contingency gain from recovered claims arising out of the bankruptcy of a supplier.  

The company also sees preliminary total net sales in the range of $3,040-$3,075 million for the third quarter. It plans to report its third-quarter results after the closing bell on Oct 31.

Shares of U.S. Steel, which currently carries a Zacks Rank #4 (Sell), rose 0.5% to close at $10.14 yesterday. The stock has lost 26.4% over the past three months, underperforming the industry’s 15.1% decline.


U.S. Steel’s shares got battered last month after it issued underwhelming guidance for the third quarter citing lower steel prices. The company’s shares also took a hit earlier this month after it said that it will acquire a 49.9% ownership stake in Arkansas-based Big River Steel for roughly $700 million in cash with a call option to purchase the remaining 50.1% within four years.

U.S. Steel said that it plans to increase its current $1.5 billion asset-backed lending facility to $2 billion to fund the acquisition. It also intends to draw on the upsized asset-backed lending facility, which has been fully committed by Barclays Capital, to finance the transaction.

United States Steel Corporation Price and Consensus


United States Steel Corporation Price and Consensus

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

Stocks to Consider

Better-ranked stocks worth a look in the basic materials space include Arconic Inc ARNC, Kinross Gold Corporation KGC and Alamos Gold Inc. AGI, all sporting a Zacks Rank #1 (Strong Buy).

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Kinross has projected earnings growth rate of 170% for the current year. The company’s shares have surged around 65% in a year’s time.

Alamos Gold has estimated earnings growth rate of 340% for the current year. The company’s shares have gained roughly 22% in a year’s time.

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