Steel companies’ 4Q15 guidance
Last week, several steel companies released their 4Q15 earnings guidance. By the looks of it, this quarter could turn out to be the most challenging since the global financial crisis of 2008–2009. To be sure, the operating environment for US (DIA) steel companies such as U.S. Steel Corporation (X), Nucor (NUE), and AK Steel (AKS) has been challenging for the most part of 2015. The steel industry’s woes have only intensified over the last couple of months.
The sell-off in steel stocks has intensified in the last couple of months, as shown in the graph above. ArcelorMittal (MT) closed at $3.88 on December 21 with a market capitalization of just under $7 billion. Compare that with the $33.1 billion that Mittal Steel paid to acquire Arcelor in 2006, and you’ll find that the combined entity today amounts to only about one-fifth of Arcelor’s 2006 price tag.
AK Steel’s (AKS) market capitalization today is less than what it paid to acquire the Dearborn plant from Severstal last year. U.S. Steel Corporation’s (X) market capitalization is only a bit above the $1 billion mark. Apparently, U.S. Steel was the first company ever to hit a market capitalization of $1 billion. You can read: What Factors Are Driving U.S. Steel’s Stock Lower? to find out more about the company.
Steel investors received another jolt when steel companies’ 4Q15 guidance came in worse than expected. In the coming parts of this series, we’ll look at the 4Q15 guidance of different steel companies and how they stack up against each other.