United States Steel Corporation X issued its guidance for third-quarter 2024. The company expects adjusted net earnings per share to be in the range of 44-48 cents and adjusted EBITDA to be $300 million.
X’s Performance Outlook for Q3
For the third quarter, the Flat-Rolled segment's adjusted EBITDA is expected to be down sequentially due to lower selling prices. However, U.S. Steel’s diverse commercial portfolio and operational efficiency are expected to help offset some of this impact.
The Mini Mill segment is also expected to report lower adjusted EBITDA sequentially, reflecting declining selling prices, although lower metallic costs may provide some relief.
The European segment’s adjusted EBITDA is projected to improve due to favorable CO2 allowance adjustments despite ongoing market challenges. The Tubular segment is expected to see a drop in adjusted EBITDA due to lower selling prices.
Despite a challenging pricing environment, U.S. Steel noted continued strength in domestic flat-rolled steel demand. The company’s guidance reflects that while pricing pressures persist, these challenges are being mitigated by a well-balanced and diversified order book in the North American Flat-Rolled segment. The European market is showing weaker demand, leading to the extended idling of Blast Furnace #1.
The company also highlighted difficulties in the Tubular segment, which faces weak pricing conditions. These headwinds are expected to affect adjusted EBITDA in the segment during the third quarter.
United States Steel Corporation Price and Consensus
United States Steel Corporation price-consensus-chart | United States Steel Corporation Quote
U.S. Steel Advances Strategic Growth Initiatives
X continues to advance its key strategic initiatives. One of the major highlights is the anticipated start-up of Big River 2 in fourth-quarter 2024. The company factored in approximately $40 million in start-up and one-time construction costs for this project in the Mini Mill segment’s third-quarter guidance.
The company is progressing on two major projects — the non-grain-oriented (NGO) electrical steel line and the new dual Galvalume/Galvanized (CGL2) coating line. These efforts are part of a broader $4-billion capital investment plan aimed at enhancing U.S. Steel’s free cash flow.
U.S. Steel and Nippon Steel Deal on Track
An important update from U.S. Steel is its ongoing transaction with Nippon Steel, with the company expressing confidence in receiving U.S. regulatory approval by the year end. Nippon Steel committed more than $1 billion to modernize Mon Valley Works and $300 million for upgrades at Blast Furnace #14 at Gary Works. U.S. Steel CEO David Burritt emphasized the strategic importance of this deal for the future of American steelmaking.
U.S. Steel Price Performance
The stock has rallied 21.9% in the past year against the industry’s 10.9% decline.
Image Source: Zacks Investment Research
X’s Zacks Rank & Key Picks
U.S. Steel currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space are IAMGOLD Corporation IAG, Eldorado Gold Corporation EGO and Hawkins, Inc. HWKN. While IAMGOLD and Eldorado Gold currently sport a Zacks Rank #1 (Strong Buy) each, Hawkins carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for IAMGOLD’s current-year earnings is pegged at 41 cents per share, indicating a rise of 355.6% from the year-ago level. IAG’s earnings beat the consensus estimate in each of the trailing four quarters, the average surprise being 200%. The stock has surged nearly 130.9% in the past year.
The Zacks Consensus Estimate for Eldorado Gold’s current-year earnings is pegged at $1.35 per share, indicating a year-over-year rise of 136.8%. EGO beat the consensus estimate in each of the trailing four quarters, the average earnings surprise being 430.3%. The company's shares have surged nearly 78.1% in the past year.
The Zacks Consensus Estimate for Hawkins’ current fiscal-year earnings is pegged at $4.14 per share, indicating a rise of 15.3% from the year-ago level. The Zacks Consensus Estimate for HWKN’s current fiscal-year earnings has increased 12.8% in the past 60 days.The stock has appreciated around 104.8% in the past year.
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