A month has gone by since the last earnings report for United States Steel (X). Shares have lost about 14.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is U.S. Steel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
U.S. Steel's Earnings & Revenues Beat Estimates in Q4
U.S. Steel slipped to net loss of $680 million or $4.00 per share in fourth-quarter 2019 from net earnings of $592 million or $3.34 per share in the year-ago quarter.
Barring one-time items, adjusted loss per share came in at 64 cents against adjusted earnings per share of $1.82 in the prior-year quarter. The figure was narrower than the Zacks Consensus Estimate of a loss of $1.14.
Revenues fell 23.5% year over year to $2,824 million in the fourth quarter. Nevertheless, the top line beat the Zacks Consensus Estimate of $2,711.7 million.
2019 Results
In 2019, the company logged a net loss of $642 million or $3.75 per share against net earnings of $1,115 million or $6.25 recorded in 2018.
Net sales in 2019 fell 8.8% year over year to $12,937 million.
Segment Highlights
Flat-Rolled: The Flat-Rolled segment incurred a net loss of $79 million in the fourth quarter against net earnings of $328 million in the year-ago quarter.
Steel shipments in the segment fell 7.9% year over year to 2,517,000 tons and average realized price per ton in the unit was $699, down 15.1% year over year.
U.S. Steel Europe: The segment posted a net loss of $30 million against net profit of $62 million in the year-ago quarter. Shipments in the segment dropped 29.5% year over year to 757,000 tons and average realized price per ton for the unit was $622, down 9.3% year over year.
Tubular: U.S. Steel’s Tubular segment’s losses widened year over year to a loss of $46 million in fourth-quarter 2019 from a loss of $3 million in fourth-quarter 2018.
Steel shipments declined 10.6% year over year to 193,000 tons. Average realized price per ton for the unit was $1,298, down 12.8% year over year.
Financials
U.S. Steel ended 2019 with cash and cash equivalents of $749 million, down 25.1% year over year. Long-term debt rose 56.6% year over year to $3,627 million.
Total cash from operating activities fell 27.3% year over year to $682 million in 2019.
Outlook
U.S. Steel expects first-quarter 2020 to witness slowdown due to lower first-quarter shipments in the Flat-rolled division as the company intends to prepare for the blast furnace outage at Gary Works in April 2020. Normal seasonality of the company’s mining operations is also expected to impact first-quarter results.
The company stated that it has achieved $75 million of run-rate fixed cost reductions. U.S. Steel also demonstrated flexibility by adjusting its 2020 capital spending to prioritize strategic investments. The company de-risked strategy execution by raising $1.1 billion of incremental capital.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -51.77% due to these changes.
VGM Scores
Currently, U.S. Steel has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise U.S. Steel has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
United States Steel Corporation (X): Free Stock Analysis Report
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