Shares of United States Steel Corp. (X) touched a new 52-week high of $34.73 on Aug 1 following its strong second-quarter 2014 results. Its shares however ended the day lower at $33.44.
Shares of this steel company, which has a market cap of $4.85 billion, have shot up roughly 94.4% over a year. Its year-to-date return is around 14%, much higher than the S&P 500’s total return of 5.4%. Average volume of shares traded over the last three months is 6,692.2K. The company’s long-term projected EPS growth rate is 6.5%.
What’s Driving U.S. Steel Up?
U.S. Steel posted strong second-quarter results on Jul 29, 2014. It 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 per share recorded a year ago. Adjusted earnings of the company were 17 cents per share in the second quarter. Analysts polled by Zacks expected a loss of 33 cents on an average for the quarter.
Revenues inched down roughly 0.7% year over year to $4,400 million, but beat expectations. The company also reported higher profits on a year over year basis in all three major business segments, reflecting its strong fundamentals.
U.S. Steel has delivered three positive earnings surprises in the trailing four quarters with an average beat of 103.68%. The company’s expected long-term EPS growth further underscores its potential.
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 to return to normal operating levels. However the company expects to face some headwinds from maintenance outages coupled with the European holiday season. Average realized prices are expected to increase in the third quarter while raw material costs have been forecast to decline in the third quarter.
U.S. Steel currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Better-ranked companies in the steel industry worth considering include Grupo Simec S.A.B. de C.V. (SIM), Olympic Steel Inc. (ZEUS) and ThyssenKrupp AG (TYEKF). While Grupo Simec sports a Zacks Rank #1 (Strong Buy), Olympic Steel and ThyssenKrupp hold a Zacks Rank #2 (Buy).
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