Earnings preview: Higher shipping likely to boost US Steel results in Q4

United States Steel Corporation (X) is scheduled to report fourth-quarter earnings results on January 30 after market close. Analysts expect the steel producer to report earnings of $1.89 per share on revenue of $3.75 billion.

Market watchers anticipate better-than-expected performance during the fourth quarter, driven by an increase in shipments. Shipments are estimated to increase mid-single digit in the Flat-Rolled segment and low-single digit in the Tubular segment, compared to the same period last year.

Meanwhile, part of these tailwinds will be offset by the lower average realized prices as well as weakness in China. Though steel prices shot up following President Donald Trump’s imposition of tariffs on imported steel, tight competition in the domestic market brought the prices down to last year’s levels in Q4.

Also, the world’s largest consumer – China – going down due to a weakness in its economy, is likely to have put the management in a fix with regards to its outlook. Notably, along with the Q3 results,  US Steel had slashed its 2018 outlook for adjusted EBITDA from a range of $1.85-$1.90 billion to $1.8 billion.

In the trailing 52 weeks, the stock has tumbled 48%, much worse than the steel industry, which fell about 31% during the same period.

During the last reported quarter, earnings were in line with analysts’ expectations at  $1.79 per share. Top line jumped 15% to $3.73 billion, surpassing the street consensus of $3.70 billion.

Earlier on Monday, shares of rival AK Steel (AKS) gained sharply after the company reported a net profit for the fourth quarter, compared to a loss last year, aided by a sharp increase in sales.

Adjusted earnings were $0.16 per share, compared to a loss of $0.08 per share in the fourth quarter of 2013. The bottom line also came in above analysts’ forecast.

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