Is the Party Over for US Steel Stocks?


Dec. 4 2020, Updated 10:53 a.m. ET

US steel stocks

As we discussed previously, Nucor (NUE) and Steel Dynamics (STLD) reported record earnings last year. AK Steel (AKS) and U.S. Steel (X) also posted a yearly rise in their 2018 earnings. The Section 232 tariffs lifted US steel prices (CLF) (SPY). After the sharp rise in earnings last year, the party seems to be over for US steel companies. Analysts expect lower earnings in 2019.

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Comparative analysis

Analysts polled by Thomson Reuters expect AK Steel to post an adjusted EBITDA of $520 million in 2019. AK Steel expects to post an adjusted EBITDA of $515 million–$535 million this year. Among other factors, the guidance assumes average HRC (hot-rolled coil) prices of $720 per ton. AK Steel posted an adjusted EBITDA of $563 million last year and $528 million in 2017.

U.S. Steel’s (X) adjusted EBITDA is expected to fall to $1.3 billion in 2019. The company posted an EBITDA of $1.76 billion last year. U.S. Steel used to provide its annual guidance during its quarterly earnings calls. Starting this year, the company will provide its quantitative guidance in the last month of the quarter—like Nucor (NUE) and Steel Dynamics (STLD).


While Nucor didn’t provide an annual earnings guidance during its fourth-quarter earnings release, the company said, “We believe that 2019 will be another strong year as we expect the earnings performance to be one of the best in Nucor’s history.” Analysts expect Nucor’s adjusted EBITDA to fall from $4.1 billion last year to $3.4 billion this year. Steel Dynamics’ adjusted EBITDA is also expected to fall from $2.0 billion in 2018 to $1.7 billion in 2019.

Despite US steel companies’ record earnings, analysts have been bearish on the sector. Read Analysts Still Hate Steel Stocks despite Bumper Earnings to see how analysts rate steel stocks after their fourth-quarter earnings.


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