United States Steel Corporation X reported net earnings of $147 million or 83 cents per share in third-quarter 2017, compared with $51 million or 32 cents recorded a year ago. The results in the reported quarter include a gain of $21 million or 11 cents related to equity affiliate transactions mainly due to divestment of the company’s ownership interest of Tilden Mining Company L.C. and $35 million or 20 cents related to debt extinguishment loss and other associated costs.
Barring one-time items, earnings came in at 92 cents per share for the reported quarter that trumped the Zacks Consensus Estimate of earnings of 67 cents.
Net sales rose roughly 20.9% year over year to $3,248 million in the quarter, also surpassing the Zacks Consensus Estimate of $3,042 million.
United States Steel Corporation Price, Consensus and EPS Surprise
United States Steel Corporation Price, Consensus and EPS Surprise | United States Steel Corporation Quote
Segment Highlights
According to the company, third-quarter results were moderately better-than-expected with stable operating performance witnessed by each of its segments.
U.S. Steel’s Flat-Rolled segment recorded a profit of $160 million in the reported quarter, an increase of roughly 40.4% year over year. Total steel shipments for the segment rose roughly 0.4% year over year to 2,544,000 tons and average realized price per ton for the flat-rolled unit was $728, up roughly 1.4% year over year.
The USSE segment posted a profit of $73 million in the reported quarter, down 9.9% year over year. Total shipments for the segment fell roughly 3.4% year over year to 1,067,000 tons and average realized price per ton for the unit was $639, up roughly 27% year over year.
U.S. Steel’s Tubular segment registered a loss of $7 million in the quarter, narrower than a loss of $75 million a year ago. Total steel shipments for the segment rose roughly 79.6% year over year to 185,000 tons and average realized price per ton for the unit was $1,433, up roughly 36.6% year over year.
Financials
U.S. Steel exited third-quarter 2017 with cash and cash equivalents of $1,694 million, roughly 17.2% year-over-year increase.
Long-term debt decreased roughly 3.1% year over year to $2,896 million. Cash flow from operations during third quarter was $299 million.
Outlook
U.S. Steel remains focused on revitalizing assets and improving costs. The company is witnessing operating improvements in the assets in which it is investing, which makes it reasonably confident to achieve the 2020 improvement targets.
For 2017, U.S. Steel expects net earnings of around $323 million or $1.83 per share, adjusted net earnings of roughly $300 million or $1.70 per share and EBITDA (earnings before interest, tax, depreciation and amortization) of roughly $1.075 billion, considering market conditions at their current levels.
The company believes market conditions will change in 2017 and it expects these changes to be reflected in adjusted EBITDA and net earnings.
Price Performance
U.S. Steel’s shares have moved up 16.4% in the last three months outperforming the 5.4% growth recorded by its industry.
Zacks Rank & Key Picks
U.S. Steel currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Koppers Holdings Inc. KOP, FMC Corporation FMC and Westlake Chemical Corporation WLK. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Koppers has an expected long-term earnings growth rate of 18%.
FMC has an expected long-term earnings growth rate of 11.3%.
Westlake Chemical has an expected long-term earnings growth rate of 8.3%.
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