Will the recent negative trend continue ahead of the next earnings release, or does US Steel expect a breakthrough in financials? Before we dive into how investors and analysts have responded lately, let's take a look at the company's latest earnings report to better understand the important factors.
Indicators of profit and revenues of the company
US Steel revenues in the United States increased in the first quarter of 2019 thanks to strong earnings in the flat products segment. The company posted quarterly net income of $ 54 million, or 31 cents per share, three times the $ 18 million, or 10 cents, for the same period last year (YoY).
Excluding one-off items, adjusted earnings were 47 cents per share, up from 32 cents a year ago. That surpassed analyst estimates of 17 cents.
Revenue grew about 11 percent year on year to $ 3,499 million in the first quarter and beat the Zacks Consensus Estimate forecast of $ 3,245 million.
Segment Highlights
Flat Products: Profit in the flat products segment this quarter was $ 95 million, nearly three times the previous year's $ 33 million.
Total steel shipments in the segment increased by about 8 percent year-on-year to 2,725,000 tonnes, with an average realized price per tonne of USD 798, about 8 percent more than the APRT.
US Steel Europe: segment profit was $ 29 million, down 74 percent from $ 110 million a year ago. Total shipments for the segment declined about 6 percent year on year to 1,064,000 tonnes, while the average realized price per tonne was $ 670, about 5 percent less than the APPD.
Pipes: US Steel's pipe segment posted a profit of $ 10 million, compared to a loss of $ 27 million for the APP.
Total steel shipments for the segment grew 16 percent year on year to 207,000 tonnes. The average realized price per tonne was $ 1,549, which is about 12 percent higher than the APPI.
Financial report
US Steel ended the quarter with cash and cash equivalents of $ 676 million, down 51 percent from the same period last year. Long-term debt fell by about 10 percent year on year to $ 2.326 million.
During the quarter, the company returned $ 51 million to shareholders, including a $ 42 million share buyback.
Outlook
US Steel noted that the growth of financial indicators continued in the first quarter, which is confirmed by strong results. The company expects second quarter adjusted EBITDA to be similar to the first quarter.
How have the ratings changed since then?
Last month, investors witnessed a downward trend in new valuations. The consensus estimate is down 44 percent due to these changes.
VGM results
Currently, US Steel has a good growth rate B, class with the same rate at the leading edge. Following exactly the same rate, the stock was assigned a B value on the value side, which placed it in the second quintile for this investment strategy.
Overall, the stock has a cumulative VGM score of A. If you are not focused on one strategy, this score is the one that will interest you.
Forecast
Valuations generally tend to decline in stock prices, and the magnitude of these changes indicates a downward bias. Not surprisingly, most experts recommend selling US Steel. We expect the metallurgical stock to be below average over the next few months.
