U.S. Steel (X) to Report Q1 Earnings: What's in the Offing?

United States Steel Corporation X is scheduled to come up with its first-quarter 2022 results after the bell on Apr 28. Healthy end-market demand and higher year-over-year steel prices are likely to have supported its first-quarter results.

The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters, while missed once. U.S. Steel has a trailing-four quarter earnings surprise of 3.9%, on average. It delivered a negative earnings surprise of roughly 20.2% in the last reported quarter.

Shares of U.S. Steel are up 37.2% over a year compared with the industry’s rise of 11%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

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 first quarter. It envisions adjusted EBITDA of roughly $1.3 billion for the quarter.

The Zacks Consensus Estimate for revenues for U.S. Steel for the first quarter is currently pinned at $5,341 million, indicating a 45.8% year-over-year rise.

Moreover, the Zacks Consensus Estimate for shipments for the company’s Flat-Rolled unit for the quarter currently stands at 2,021,000 tons, reflecting a 13.3% year-over-year decline. The consensus estimate for average realized price per ton in the unit stands at $1,464, suggesting a 64.9% year-over-year increase.

The consensus estimate for shipments for the Mini Mill unit is pegged at 505,000 tons, suggesting a 9.7% sequential decline. The same for average realized price per ton for the unit stands at $1,208, reflecting a 18.9% sequential decrease.

The Zacks Consensus Estimate for shipments for the U.S. Steel Europe segment is pegged at 1,019,000 tons, indicating a 2.3% year-over-year decline. The same for average realized price per ton for the unit stands at $1,098, calling for a 77.1% year-over-year rise.

For the Tubular segment, the consensus estimate for shipments is pegged at 132,000 tons, reflecting a 48.3% year-over-year rise. The same for average realized price per ton for the unit stands at $2,050, calling for a 49.4% year-over-year increase.

Some Factors at Play

The company’s first-quarter results are likely to have benefited from healthy demand across end markets, higher domestic steel prices and its actions to improve cost and operating performance. It is expected to have gained from an uptick in fixed-price contracts in the quarter to be reported.

U.S. steel prices witnessed a significant rally last year supported by strong underlying supply and demand fundamentals. However, prices came under pressure since the beginning of the fourth quarter of 2021, partly due to rising production levels.

The benchmark hot-rolled coil (“HRC”) prices started to cool off since October after peaking in September 2021, dragged down by shorter lead times and rising supply. Prices slumped to nearly $1,000 per short ton at the beginning of March 2022. However, HRC prices have recovered of late amid the supply worries stemming from Russia's invasion of Ukraine along with extending lead times. Prices have rebounded in the recent weeks to above $1,400 per short ton. Higher domestic steel prices are likely to have boosted the company’s selling prices and supported its bottom line in the to-be-reported quarter.

The Flat-Rolled segment is expected to have gained from higher steel selling prices in the first quarter. The Tubular segment is also expected to have gained from higher selling prices. The company is also expected to have witnessed stable demand and pricing in the Europe unit.

However, margins in the Flat-Rolled segment are likely to have been impacted by seasonal mining headwinds and higher raw material costs. The company expects headwinds of $150 million associated with the seasonality of mine in the first quarter. The results in the Mini Mill unit is also likely to have been impacted by cautious spot market activity.

 

United States Steel Corporation Price and EPS Surprise

 

United States Steel Corporation Price and EPS Surprise

United States Steel Corporation price-eps-surprise | United States Steel Corporation Quote

 

Zacks Model

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 -9.78%. The Zacks Consensus Estimate for earnings for the first quarter is currently pegged at $3.30. 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.

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:

The Mosaic Company MOS, scheduled to release earnings on May 2, has an Earnings ESP of +0.89% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Mosaic’s first-quarter earnings has been revised 14.6% upward over the past 60 days. The Zacks Consensus Estimate for MOS’s earnings for the quarter is currently pegged at $2.44.

Westlake Corporation WLK, slated to release earnings on May 3, has an Earnings ESP of +17.30% and carries a Zacks Rank #1.

The Zacks Consensus Estimate for Westlake's first-quarter earnings has been revised 22.1% upward over the past 60 days. The consensus estimate for WLK’s earnings for the quarter is currently pegged at $4.53.

Methanex Corporation MEOH, scheduled to release earnings on Apr 27, has an Earnings ESP of +6.70% and carries a Zacks Rank #3.

The Zacks Consensus Estimate for Methanex's first-quarter earnings has been revised 4.5% upward over the past 60 days. The consensus estimate for MEOH’s earnings for the quarter is currently pegged at $2.09.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


Bitcoin, Like the Internet Itself, Could Change Everything

Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.

Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. 

See 3 crypto-related stocks now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Westlake Corp. (WLK): Free Stock Analysis Report
 
United States Steel Corporation (X): Free Stock Analysis Report
 
Methanex Corporation (MEOH): Free Stock Analysis Report
 
The Mosaic Company (MOS): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.