On Sep 5, Zacks Investment Research upgraded steel producer United States Steel Corp. (X) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
On Jul 29, U.S. Steel posted better-than-expected second-quarter 2014 results. The company narrowed its losses in the reported quarter backed by gains from its cost improvement strategies under the Carnegie Way initiative and improved pricing that offset weather-related headwinds.
Net loss for the reported quarter was $18 million or 12 cents per share compared with a net loss of $78 million or 54 cents recorded a year ago. Adjusted earnings of the company were 17 cents per share in the second quarter.
Revenues inched down roughly 0.7% year over year to $4,400 million. The company also reported higher profits on a year-over-year basis in all three major business segments reflecting its strong fundamentals. Both revenues and adjusted earnings beat Zacks Consensus Estimates.
U.S. Steel has witnessed a significant rise in the estimates for both the current quarter as well as 2014 since the release of second-quarter results. For the current quarter, a number of estimates have been revised upward causing the Zacks Consensus Estimate to jump roughly 76% to 90 cents. For the current year, the estimate revision trend has also been impressive with the Zacks Consensus Estimate surging around 86% to $2.10.
U.S. Steel is seeing strong demand in the automotive space. Its partnership with specialty alloy maker Carpenter Technology Corp. (CRS) to develop lighter high-strength steel for automotive applications will usher in incremental opportunity in the automotive market.
Moving ahead, U.S. Steel is expected see a considerable rise in income from operations and higher shipments in the third quarter of 2014 on a sequential basis as it expects operating levels to normalize.
Other Stocks to Consider
Some well-performing companies in the steel industry worth considering are Grupo Simec S.A.B. de C.V. (SIM) and TimkenSteel Corp. (TMST). Both the stocks sport a Zacks Rank #1 (Strong Buy).
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