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U.S. Steel Corporation’s 4Q17 Performance: Key Drivers

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U.S. Steel Corporation’s 4Q17 performance

U.S. Steel Corporation (X) and Cleveland-Cliffs (CLF) provide annual earnings guidance during their quarterly earnings calls. During its 3Q17 earnings call, U.S. Steel Corporation said that it expects to post an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of ~$1.08 billion in fiscal 2017. It generated an adjusted EBITDA of $778 million in the first nine months of the year. Looking at the company’s guidance, it expects to post an adjusted EBITDA of $297 million in 4Q17.

Consensus estimates

Analysts polled by Thomson Reuters expect U.S. Steel Corporation to post an adjusted EBITDA of $316 million in 4Q17, which is higher compared to the company’s guidance. Notably, Nucor’s (NUE) 4Q17 guidance, which was released last week, was lower compared to what the company guided during its 3Q17 earnings call.

Looking at US steel markets, flat steel prices have recovered since U.S. Steel Corporation provided its 2017 earnings guidance. Notably, U.S. Steel Corporation’s guidance is based on prevailing steel and raw material prices. Since steel prices have risen in 4Q17, U.S. Steel Corporation’s 4Q17 earnings could be higher compared to the company’s guidance.

Since US steel prices have seen some traction after a series of price hike announcements by companies like AK Steel (AKS), analysts have also taken a favorable view of steel stocks (MT). Read Wall Street Warms Up to Steel as Section 232 Deadline Looms to find out how analysts have changed their views on U.S. Steel Corporation.

Along with the Section 232 imports probe, the Chinese steel industry’s outlook could also impact US steel stocks in 2018.

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