U.S. Steel Corporation’s 2018 guidance
Earlier this month, U.S. Steel Corporation (X) raised its 2018 earnings guidance. The company expects to post an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $1.7 billion this year—compared to its previous guidance of $1.5 billion.
Meanwhile, despite U.S. Steel Corporation increasing its 2018 EBITDA guidance on March 12, 2018, its stock fell on the day. Other steel companies like ArcelorMittal (MT) and AK Steel (AKS) saw upward price action on that day. Last week, Nucor (NUE) and Steel Dynamics (STLD) released their 1Q18 guidance. While Nucor’s guidance was better than expected, Steel Dynamics’ guidance fell short of analysts’ estimates.
What’s baked in
Coming back to U.S. Steel Corporation, the company assumed spot HRC (hot-rolled coil) prices of $695 per ton when it gave its 2018 EBITDA guidance of $1.5 billion during the 4Q17 earnings call. Currently, spot HRC prices are higher by almost $150 per ton—compared to what U.S. Steel Corporation assumed in its previous guidance.
Although U.S. Steel Corporations’s updated guidance was higher compared to the consensus estimates, it looked on the lower side based on the recent uptick in US steel prices. Notably, U.S. Steel Corporation hasn’t provided the steel prices that it assumed in its updated guidance. The guidance could also include some restart-related costs at its Granite City operations. We might have to wait for U.S. Steel Corporation’s 1Q18 earnings call to learn more. There’s also a possibility that the company could increase its earnings guidance.
Read How Analysts View Steel Stocks after Section 232 Tariffs to find out how Wall Street changed its view on leading steel producers in the past month.