What To Expect From U.S. Steel’s Q1 Earnings
U.S. Steel (NYSE:X) will report its first-quarter 2018 results on April 26 and conduct a conference call with analysts the following day. Consensus market estimates expect the company to report a mean revenue of $3.15 billion and mean adj-EPS of $0.29. The company is expected to display strong performance with notably higher year-on-year (y-o-y) revenue and earnings. The company is likely to benefit from higher steel prices due to the recent market developments which would consequently boost revenue. Additionally, the company’s tubular segment is expected to report considerable outperformance due to a favorable market environment.
The imposition of punitive tariffs by Pres. Trump during the first quarter of 2018 has given a steady boost to steel prices which are expected to translate into higher revenue for steel producers in the U.S. U.S. Steel will especially be in a winning position in this situation as the company derives close to 70% of its total revenue from its U.S. Flat-rolled division. However, the company’s ongoing asset revitalization program has been dampening its steel output since 2017 and is expected to continue to disrupt operations throughout 2018. On the other hand, however, with improving market conditions, the company has recently announced the restart of a blast furnace and steelmaking facility at Granite City Works which is expected to add 100,000 tons of shipment per month. The likely increase is expected mostly over the second half of the year. Thus, even with the existence of such favorable market conditions, the company will most likely not be able to take complete advantage of higher steel prices.
Additionally, we expect higher oil prices to boost the shipments of the company’s tubular steel division, which produces steels used in oil and gas drilling activities. As confirmed by a Longbow analyst, both U.S. domestic mill shipments and market prices are trending above expectations, which should provide a great boost to the company’s Tubular segment. U.S. Steel’s Tubular segment has been experiencing a recovery in its revenue since 2017, post the implementation of production cuts by Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC allies.
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Our key expectations for the company’s 2018 results are outlined in our interactive dashboard. These figures represent our pre-earnings expectations and figures will be modified based on the actual results. You can make changes to our assumptions and arrive at your own fair price estimate for the company.
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