U.S. Steel (X) Sees Market Improvement to Support Q3 Results

United States Steel Corporation X has issued its guidance for third-quarter 2020.

The company projects adjusted EBITDA to be a loss of around $100 million for the third quarter. Adjusted loss per share is forecast to be around $1.45.  

The company is encouraged by the pace at which the market is improving. It expects Flat-rolled segment results to be negative in the third quarter but sequentially better than the second quarter. The company has responded to an improving order booking by restarting three blast furnaces, which it temporarily idled in response to the coronavirus pandemic. However, the company expects its two blast furnaces to remain temporarily idled throughout 2020 on the basis of current order activities.

The pace of market improvement in Europe has also exceeded the company’s expectations. U.S. Steel stated that market recovery has continued throughout the third quarter. Further, its order booking and lead times indicate that the pace of recovery is likely to continue. Moreover, actions to improve the cost profile are expected to get reflected in third-quarter financial performance, the company noted.

Per the company, market conditions in Tubular business seems to have bottomed-out but catalysts for improvement are limited. It expects third-quarter performance to be in-line with the second quarter.

Shares of U.S. Steel have lost 27.9% in the past year compared with the industry’s 5% decline.

Zacks Rank & Key Picks

U.S. Steel currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Barrick Gold Corporation GOLD, Pretium Resources, Inc. PVG and Maverix Metals Inc. MMX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Barrick has an expected earnings growth rate of 80.4% for 2020. The company’s shares have surged 51.2% in the past year.

Pretium Resources has an expected earnings growth rate of 20% for 2020. Its shares have returned 6.7% in the past year.

Maverix has an expected earnings growth rate of 33.3% for 2020. The company’s shares have gained 18.7% in the past year.

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