U.S. Steel (X) Tops Earnings And Revenue Estimates In Q1

United States Steel Corporation (NYSE:X) saw its profits jump in the first quarter of 2019, driven by strong earnings in its Flat-Rolled segment. The Pittsburgh-based steel maker logged net earnings of $54 million or 31 cents per share for the quarter, up three-fold from $18 million or 10 cents in the year-ago quarter.

Barring one-time items, adjusted earnings came in at 47 cents a share, up from 32 cents a year ago. It trounced the Zacks Consensus Estimate of 17 cents.

Revenues rose roughly 11% year over year to $3,499 million in the quarter, and surpassed the Zacks Consensus Estimate of $3,245.1 million.

Segment Highlights

Flat-Rolled: Profit in the Flat-Rolled segment was $95 million in the quarter, a nearly three-fold surge from $33 million in the year-ago quarter.

Total steel shipments in the segment rose roughly 8% year over year to 2,725,000 tons and average realized price per ton in the unit was $798, up roughly 8%.

U.S. Steel Europe: The segment delivered a profit of $29 million, down 74% from $110 million a year ago. Total shipments in the segment went down around 6% year over year to 1,064,000 tons and average realized price per ton for the unit was $670, down roughly 5% year over year.

Tubular: U.S. Steel’s Tubular segment posted a profit $10 million, compared with a loss of $27 million in the year-ago quarter.

Total steel shipments for the segment was up around 16% year over year to 207,000 tons. Average realized price per ton for the unit was $1,549, up roughly 12%.

Financials

U.S. Steel ended the quarter with cash and cash equivalents of $676 million, down around 51% year over year. Long-term debt fell roughly 10% year over year to $2,326 million.

The company returned $51 million to shareholders during the quarter including share repurchases worth $42 million.

Outlook

U.S. Steel noted that its progress continued in the first quarter as reflected by the strong results. The company announced that it will invest more than $1 billion to build a new sustainable endless casting and rolling facility at its Edgar Thomson Plant in Braddock, PA, and a cogeneration facility at its Clairton Plant in Clairton, PA., both part of its Mon Valley Works. U.S. Steel said that this investment will further strengthen its competitive position and generate long-term value for its shareholders, customers and employees.

U.S. Steel also expects its capital expenditure to increase to $1.3 billion in 2019 as a result of the restart of the Fairfield electric arc furnace (EAF) and repairs at its Clairton facility.

Price Performance

Shares of U.S. Steel have lost 58.3% over a year, underperforming the industry’s 31.7% decline.

Zacks Rank and Stocks to Consider

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

Better-ranked stocks in the basic materials space include Sandstorm Gold Ltd. (NYSE:SAND) , Flexible Solutions International Inc. (NYSE:FSI) and Israel Chemicals Ltd. (NYSE:ICL) .

Sandstorm Gold has an expected earnings growth rate of 200% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have gained around 8% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 100% in the past year.

Israel Chemicals has an expected earnings growth rate of 13.5% for the current year and carries a Zacks Rank #2. Its shares have gained around 13% in the past year.

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