Key Takeaways from U.S. Steel’s Q4 2017 Results
U.S. Steel (NYSE: X) released its Q4 2017 and full-year earnings results on January 31 and conducted a conference call with analysts on the following day. The company surpassed both revenue and earnings estimates in Q4 2017 having displayed a Year-on-Year (Y-o-Y) revenue growth of 18% driven by an improving economic condition in its key markets. Despite a strong quarter, the stock price of the company has been trading in the red since the day before its earnings release as a result of a downgrade received from the Vertical Research group. U.S. Steel has been issued a sell rating at a target price of $25 by the Vertical group which has distressed investor confidence in the company’s stock.
The graph below summarizes Q4 2017 results with the estimated sales and earnings figure for the upcoming quarter. These have been created using our new interactive platform.
As illustrated above, U.S. Steel reported a Year-on-Year (Y-o-Y) increase in revenue of 18%, however, sequential performance lagged in almost all divisions in Q4 except for its European segment. Improving economic conditions in the U.S. & Europe helped sustain higher revenue levels.
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The company’s Tubular segment, which has been outperforming throughout 2017 with recovering oil prices, saw a moderate Quarter-on-Quarter (Q-o-Q) fall in revenue in Q4 due to a fall in the volume of oil & gas rig counts in the U.S. which was further aggravated by a high volume of imports of Oil Country Tubular Goods (OCTG) into the U.S. This segment is otherwise expected to remain stable in the upcoming quarters.
The Carnegie Way, U.S. Steel’s umbrella initiative for cost reduction and productivity improvement, helped prop up the company’s earnings, offsetting the impact of lower flat-rolled shipments for the year ended 2017. The benefits realized through the Carnegie Way initiative reflect a reduction in overhead costs and operational improvements at steelmaking facilities including yield improvements and improved blast furnace fuel mix.
Looking forward, the company plans to focus on its asset revitalization program to improve their asset base and deliver stronger results. The company will significantly benefit if additional trade restrictions are imposed by Pres. Trump based on the findings of the Section 232 investigation. We look forward as the upcoming quarter unfolds.
We have a $38 price estimate for U.S. Steel which is slightly above the market price.
Have more questions about U.S. Steel? See the links below.
- What Is The Upside To U.S. Steel If Its Tubular Segment Reaches Its Historic Highs?
- How Much Can a Positive Implication of Section 232 Impact U.S. Steel?
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