64.42 +0.04 (0.06%)
Pre-Market: 9:06AM EDT
|Bid||62.51 x 900|
|Ask||64.88 x 800|
|Day's Range||63.62 - 64.87|
|52 Week Range||53.42 - 70.48|
|PE Ratio (TTM)||12.34|
|Earnings Date||Oct 17, 2018 - Oct 22, 2018|
|Forward Dividend & Yield||1.52 (2.43%)|
|1y Target Est||78.12|
What a company does during industry upturns isn't what makes it great, it's how it handles downturns that's the real differentiator.
AK Steel (AKS) has gained more than 15% from its 2018 lows. U.S. Steel Corporation (X) has lost 15.3% YTD. Nucor (NUE) and Cleveland-Cliffs (CLF) have gained 2.3% and 69.2% YTD, respectively, based on the closing prices on September 18.
So far in this series, we’ve discussed Nucor (NUE), Steel Dynamics (STLD), and U.S. Steel Corporation’s (X) third-quarter earnings guidance. In this part, we’ll see how things look for AK Steel (AKS) in the third quarter and beyond. AK Steel has underperformed the broader steel space (XME) in 2018. The stock saw a selling spree after its first and second-quarter earnings release. In the second quarter, AK Steel missed the consensus estimates and its third-quarter guidance also spooked the markets. Let’s see what analysts project for the company’s third-quarter earnings.
U.S. Steel Corporation (X) is having a dismal run in 2018. The stock has lost 15.3% year-to-date based on the closing prices on September 18. AK Steel (AKS) has lost 17.3% YTD, while Nucor (NUE) has risen 2.3%. Cleveland-Cliffs (CLF) has outperformed US steel stocks (XME) in 2018 with gains of 69.2%. Let’s see what could drive U.S. Steel Corporation’s performance in 2019.
While the steel industry faces risks from escalating trade tensions, it is gaining from favorable demand and pricing fundamentals.
Nucor (NUE), the largest US-based steel producer, posted its highest second-quarter earnings ever in the second quarter of 2018. Steel Dynamics (STLD) also posted record earnings in the second quarter. The Section 232 tariffs lifted US steel prices to multiyear highs. ArcelorMittal (MT) only gets a quarter of its revenues from NAFTA. ArcelorMittal also posted its highest earnings in seven years. However, U.S. Steel Corporation (X) and AK Steel’s (AKS) earnings have lagged other steel companies in 2018.
Previously in this series, we discussed Nucor (NUE) and Steel Dynamics’ (STLD) third-quarter earnings guidance. In this part, we’ll discuss U.S. Steel Corporation’s (X) third-quarter earnings estimates compared to the company’s guidance.
Last week, Nucor (NUE), the largest US-based steel producer, released its third-quarter guidance. The company expects to post an EPS of $2.35–$2.40 in the quarter. Nucor posted an EPS of $2.13 in the second quarter and $0.79 in the third quarter of 2017. Nucor’s third-quarter earnings guidance was in line with analysts’ estimates. Previously, Nucor posted better-than-expected guidance in the second quarter.
Now, we’re approaching the end of the third quarter. Nucor (NUE) released its third-quarter earnings guidance on September 14, while Steel Dynamics (STLD) released its earnings guidance on September 17. In this series, we’ll discuss Nucor and Steel Dynamics’ third-quarter guidance. We’ll also analyze the third-quarter guidance provided by other steel companies during their second-quarter earnings call. We’ll discuss steel companies’ outlook.
Nucor (NUE) seems to be a good value pick, as it has decent revenue metrics to back up its earnings, and is seeing solid earnings estimate revisions as well.
Nucor (NUE) expects Q3 earnings between $2.35 and $2.40 per share as it expects sustainable strength in steel end-use markets to continue.
Nucor expects third quarter results to be in the range of $2.35 to $2.40 per diluted share. This range is an increase compared to the second quarter of 2018 consolidated net earnings of $2.13 per diluted share and third quarter of 2017 earnings of $0.79 per diluted share. Projected third quarter of 2018 results include an estimated benefit of approximately $25 million, or $0.06 per diluted share, related to insurance recoveries.
As noted in the previous article, steel companies’ valuations look attractive based on forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiples. However, these multiples are based on analysts’ earnings estimates, so it is prudent to read the multiples in conjunction with earnings estimates.
This month we’ve seen share buyback announcements by both Nucor (NUE) and Steel Dynamics (STLD). Share buybacks are a tool for management to return cash to shareholders. Generally, companies pursue share buybacks when they have surplus cash or they find their stocks undervalued. Steel companies’ cash flows have certainly improved amid higher steel prices. But do their valuations look tempting?
Last month, at the restart of Century Aluminum’s (CENX) smelter in Kentucky, Commerce Secretary Wilbur Ross said, “This administration remains steadfast in our Made in the U.S.A. commitment.” The Trump administration has used tariffs to curb imports and boost domestic manufacturing. To be sure, we’ve seen some impact from the Section 232 tariffs, as US steel imports have seen a year-over-year fall this year.
China (FXI) is the world’s largest steel producer and consumer. The country’s steel overcapacity and exports have been blamed for depressing global steel prices. However, Chinese steel exports have come down sharply from their 2015 highs. In August, China exported 5.8 million metric tons of steel products, a yearly fall of 9.8%. In the first eight months of 2018, Chinese steel exports have fallen 13.3% to 47.2 million metric tons.
President Trump has left the door open for exemptions from Section 232 tariffs. The exemptions would be on a product level as well as a country level. So far, countries like South Korea, Brazil, and Argentina have managed to see exemptions from Section 232 tariffs. The uncertainty about Section 232 exemptions is one reason why investors have shied away from steel stocks. In this article, we’ll see how Section 232 exemptions could impact US steel prices.
In this article, we’ll look at some of the risks that the US steel industry faces towards the end of 2018. We’ll look at global as well as domestic challenges.
According to AISI (American Iron and Steel Institute) data, US steel production rose 9.8% YoY in the week ending September 8. On a year-to-date basis, US steel production has risen 4.1% compared to the same period in 2017.
While several industries have been crying foul over President Trump’s trade policies, the US steel industry has been among the biggest benefactors of these trade policies. Earlier this year, Trump imposed a 25% tariff on US steel imports, triggering a wave of joy in US steel companies. To be sure, we’ve started to see the impact of these tariffs on the US steel industry. US steel production has gained traction, while imports have fallen on a yearly basis this year.