Last year Steel stocks barely made it out alive. After being down considerably most of the year a late stage rally helped push
the sector into positive territory. As the sector limped across the finish line, the S&P 500 booked a 32.39% return on the year.
Recently, a budding global economic recovery has seen steel come en vogue for 2014. Already this earnings season has given us
a couple upside surprises on some big steel names.
AK Steel (AKS) reported fourth quarter earnings of $0.09, nearly doubling the analyst consensus of $0.05. This earnings surprise
of 80% is a major factor contributing to a Zacks #2 Rank. This surprise led to upside revisions of 2014 estimates and helped
bump AKS over $6 a share.
The day before AKS reported earnings, mainstay US Steel (X) surprised everyone to the upside. Analysts looking for a $0.26 loss
in Q4 were shocked when the company reported positive earnings of $0.27 a share. Music to the ears of US Steel investors who
had not heard a positive print since Q3 2012 when the company made $0.41 a share. Although analysts have curbed their
expectations for Q1 of this year, the rest of year looks bullish for the steel business. All this together leads to a Zacks #1
Rank for US Steel.
Let's ignore the rearview mirror for a second and take aim on the future. With 2 major steel companies already reporting good
quarterly numbers with upside surprises, who is next on the earnings calendar? The big boy on the block, ArcelorMittal (MT) is
the world's leading steel and mining company. Operating in more than 60 countries this global company commands the lion's
share of world steel market. Not only is the company a Zacks #1 Rank but it also reports earnings this week on February 7th.
Given the great earnings we saw from AK Steel and US Steel, don't be surprised if ArchelorMittal beats the consensus estimate
of a $0.16 loss.
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