U.S. Steel (X) Tops Earnings And Revenue Estimates In Q2

United States Steel Corporation (NYSE:X) saw lower profits in the second quarter of 2019. The Pittsburgh-based steel maker logged net earnings of $68 million or 39 cents per share for the quarter, down 68% from $214 million or $1.20 in the year-ago quarter.

Barring one-time items, adjusted earnings came in at 45 cents a share, down from $1.46 a year ago. It surpassed the Zacks Consensus Estimate of 40 cents.

Revenues fell roughly 2% year over year to $3,545 million in the quarter, but beat the Zacks Consensus Estimate of $3,373.5 million.

Segment Highlights

Flat-Rolled: Profit in the Flat-Rolled segment was $134 million in the quarter, down 40% from $224 million in the year-ago quarter, hurt by lower prices.

Total steel shipments in the segment rose roughly 9% year over year to 2,804,000 tons and average realized price per ton in the unit was $779, down roughly 5%.

U.S. Steel Europe: The segment recorded a loss of $10 million, compared with a profit of $115 million a year ago. Total shipments in the segment went down around 13% year over year to 1,004,000 tons and average realized price per ton for the unit was $652, down roughly 8% year over year.

Tubular: U.S. Steel’s Tubular segment posted a loss $6 million, compared with a loss of $35 million in the year-ago quarter.

Total steel shipments for the segment was down around 3% year over year to 195,000 tons. Average realized price per ton for the unit was $1,524, up roughly 5%.

Financials

U.S. Steel ended the quarter with cash and cash equivalents of $651 million, down around 47% year over year. Long-term debt fell roughly 8% year over year to $2,345 million.

The company returned $37 million to shareholders during the quarter including share repurchases worth $28 million.

Outlook

U.S. Steel noted that it completed several asset revitalization outages across the flat-rolled footprint on time and budget during the reported quarter. These include upgrades to its Mon Valley steel shop. The company expects these investments to boost its operating performance and reliability to offer low-cost, high-quality liquid steel for its future endless casting and rolling investment.

The company also said that execution of its technology investments including the endless casting and rolling line at Mon Valley, USSK dynamo line and tubular electric arc furnace remain on track to deliver around $400 million of incremental run-rate EBITDA benefits once completed.

Price Performance

Shares of U.S. Steel have lost 55% over a year, underperforming the industry’s 31.5% decline.

Zacks Rank & Key Picks

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

A few better-ranked stocks worth considering in the basic materials space include Arconic Inc. (NYSE:ARNC) , Kinross Gold Corporation (NYSE:KGC) and Flexible Solutions International Inc (NYSE:FSI) .

Arconic has an estimated earnings growth rate of 38.2% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have moved up 15% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has projected earnings growth rate of 100% for the current year and carries a Zacks Rank #1. The company’s shares have gained 30.3% in a year’s time.

Flexible Solutions has an expected earnings growth rate of 342.9% for the current fiscal year and carries Zacks Rank #2 (Buy). Its shares have surged around 111% in the past year.

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