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U.S. Steel (X) Earnings Beat Estimates in Q1, Revenues Miss

United States Steel Corporation X slipped to a net loss of $391 million or $2.30 per share in first-quarter 2020 from net earnings of $54 million or 31 cents per share reported in the year-ago quarter.

Barring one-time items, adjusted loss per share was 73 cents against adjusted earnings per share of 47 cents in the prior-year quarter. The figure was narrower than the Zacks Consensus Estimate of a loss of 80 cents.

Revenues fell 21.5% year over year to $2,748 million in the first quarter. Moreover, the top line missed the Zacks Consensus Estimate of $2,776.1 million.

United States Steel Corporation Price, Consensus and EPS Surprise

 

United States Steel Corporation Price, Consensus and EPS Surprise
United States Steel Corporation Price, Consensus and EPS Surprise

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

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Segment Highlights

Flat-Rolled: The Flat-Rolled segment recorded a loss of $35 million in the first quarter against net earnings of $95 million in the year-ago quarter.

Steel shipments in the segment fell 7.9% year over year to 2,509,000 tons and average realized price per ton in the unit was $711, down 10.9% year over year.

U.S. Steel Europe: The segment posted a loss of $14 million against a net profit of $29 million in the year-ago quarter. Shipments in the segment dropped 24.7% year over year to 801,000 tons and average realized price per ton for the unit was $611, down 8.8% year over year.

Tubular: The Tubular segments posted a loss of $48 million against a net profit of $10 million in the year-ago quarter.

Steel shipments declined 9.7% year over year to 187,000 tons. Average realized price per ton for the unit was $1,283, down 17.2% year over year.

Financials

U.S. Steel ended the quarter with cash and cash equivalents of $1,350 million, up 144% year over year. Long-term debt rose 98.5% year over year to $4,616 million.

Outlook

The company adjusted its footprint, strengthened its balance sheet and aggressively cut costs as the impacts of the coronavirus pandemic and changes in the oil and gas markets became evident. Notably, the actions helped it surpass its first-quarter outlook. 

The company granted Stelco an option to purchase a 25% stake in its Minntac iron ore mining operations for the purchase price of $600 million. Notably, the move showcases the continued execution of its strategy and delivers $100 million of incremental cash to the balance sheet in 2020. Also, the transaction gives U.S. Steel a path to record an additional $500 million of capital to support the continued execution of its strategy.

Price Performance

Shares of the company have plunged 54.8% in the past a year compared with the industry’s 39.3% decline.

 

 

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Equinox Gold Corp. EQX, Franco-Nevada Corporation FNV and Kinross Gold Corporation KGC.

Equinox Gold currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 231% for 2020. The company’s shares have gained 45.4% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Franco-Nevada has a projected earnings growth rate of 22% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 94% in a year.

Kinross has a projected earnings growth rate of 52.9% for 2020. The company’s shares have surged 122.8% in a year. It currently has a Zacks Rank #2.

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