United States Steel Corporation (X) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of United States Steel (X)? Shares have been on the move with the stock up 3.4% over the past month. The stock hit a new 52-week high of $33.74 in the previous session. United States Steel has gained 34.1% since the start of the year compared to the -0.8% move for the Zacks Basic Materials sector and the 12.6% return for the Zacks Steel - Producers industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 26, 2023, U.S. Steel reported EPS of $1.4 versus consensus estimate of $1.15.
For the current fiscal year, U.S. Steel is expected to post earnings of $4.19 per share on $17.87 billion in revenues. This represents a -57.89% change in EPS on a -15.16% change in revenues. For the next fiscal year, the company is expected to earn $1.96 per share on $15.7 billion in revenues. This represents a year-over-year change of -53.24% and -12.17%, respectively.
Valuation Metrics
U.S. Steel may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
U.S. Steel has a Value Score of A. The stock's Growth and Momentum Scores are C and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 8X current fiscal year EPS estimates, which is not in-line with the peer industry average of 8.7X. On a trailing cash flow basis, the stock currently trades at 2.2X versus its peer group's average of 2.6X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, U.S. Steel currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if U.S. Steel meets the list of requirements. Thus, it seems as though U.S. Steel shares could have potential in the weeks and months to come.
How Does X Stack Up to the Competition?
Shares of X have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Universal Stainless & Alloy Products, Inc. (USAP). USAP has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of A.
Earnings were strong last quarter. Universal Stainless & Alloy Products, Inc. beat our consensus estimate by 33.33%, and for the current fiscal year, USAP is expected to post earnings of $1.25 per share on revenue of $279.32 million.
Shares of Universal Stainless & Alloy Products, Inc. have gained 6.9% over the past month, and currently trade at a forward P/E of 26.96X and a P/CF of 9.91X.
The Steel - Producers industry may rank in the bottom 73% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for X and USAP, even beyond their own solid fundamental situation.
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United States Steel Corporation (X) : Free Stock Analysis Report
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