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U.S. Steel’s Q4 Earnings: The Most Crucial Metric to Watch For

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U.S. Steel’s Q4 earnings

U.S. Steel Corporation (X) is scheduled to release its fourth-quarter earnings today after the markets close and to hold its earnings call tomorrow. Nucor (NUE) and Steel Dynamics (STLD) have already released their fourth-quarter earnings and posted better-than-expected earnings. In this article, we’ll look at the key metric that markets should watch for in U.S. Steel’s fourth-quarter earnings.

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2019 guidance

U.S. Steel Corporation provides annual EBITDA guidance during its earnings release. In my view, this could be the most crucial metric to watch for in the company’s earnings release. Last year, U.S. Steel’s guidance looked dismal after the sharp rise in spot steel prices (XME).

Fast-forward to 2019, and US steel prices have come off their 2018 highs. However, spot HRC (hot roll coil) prices are slightly higher than what we had in January 2018, when U.S. Steel gave 2018 EBITDA guidance of $1.5 billion. U.S. Steel changed its guidance methodology last year. It no longer assumes static steel prices and, rather, factors in its estimate of expected steel prices over the course of the year.

Analysts’ estimate

Analysts polled by Thomson Reuters expect U.S. Steel to post adjusted EBITDA of $1.59 billion this year. AK Steel’s 2019 guidance was lower than analysts projected. However, the stock still rallied after its earnings release.

Along with the EBITDA guidance, U.S. Steel’s comments on the fire at its Clairton plant should be keenly followed. KeyBanc analyst Phil Gibbs had raised concerns over the repercussions of the fire. But so far in 2019, U.S. Steel has denied bears any victory. We’ll explore this performance in the next and final part of this series.

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