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Will U.S. Steel Beat 4Q16 Revenue Estimates?



4Q16 revenue estimates

According to data compiled by Thomson Reuters, analysts expect U.S. Steel Corporation (X) to post revenue of $2.65 billion in 4Q16 and $2.89 billion in 1Q17. In contrast, it posted revenue of nearly $2.57 billion in 4Q15 and $2.68 billion in 3Q16. While analysts expect U.S. Steel’s 4Q16 revenues to rise yearly, they’re expected to be flat on a sequential basis.

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Missed estimates in 3Q16

We should remember that U.S. Steel missed consensus revenue estimates in 3Q16. Steel companies’ (MT) (AKS) revenues are basically a function of shipments and average selling prices. Shipments depend on end-user demand as well as import penetration. U.S. Steel’s 3Q16 revenues fell due to unplanned outages at some of its facilities. As a result of the outages, the company’s steel shipments were impacted negatively by 125,000 tons in 3Q16.

Can it beat estimates in 4Q16?

Steel production in the US has risen on a yearly basis in 4Q16. US steel production had a sharp fall in 4Q15. Steel companies curtailed their production in response to falling steel prices. Notably, spot hot-rolled coil prices fell below $400 per short ton in 4Q15. It prompted steel companies to cut the production of commodity-grade steel products. Steel companies like Nucor (NUE) and Steel Dynamics (STLD) are expected to post a yearly increase in their 4Q16 steel shipments based on the trend in US steel production.

Although steel companies could report a sequential decline in their 4Q16 average selling prices, we could see them rise on a yearly basis.

In the next part, we’ll analyze analysts’ estimates for U.S. Steel’s 4Q16 profitability.


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