United States Steel Wows Investors With Projections, Should You Buy?

NYSE: X | United States Steel Corporation  News, Ratings, and Charts

X – United States Steel (X) had reported stellar earnings in its last reported quarter. Although analysts expect its EPS to decline this year, the company is confident of reporting solid results on the back of growing demand and better selling prices. So, is it wise to buy the stock now? Read on to learn our view.

United States Steel Corporation (X) is an integrated steel producer engaged in producing and selling steel products, including flat-rolled and tubular products, in North America and Europe. It operates through four segments: North American Flat-Rolled, Mini Mill, U.S. Steel Europe, and Tubular Products.

After reporting stellar revenue and earnings in the first quarter ended March 31, 2022, X expects even better numbers in the second quarter. The company expects its best-ever second quarter with adjusted EBITDA at $1.60 billion, while its adjusted earnings are expected to come in the range of $3.83 to $3.88.

X’s President and CEO David B. Burritt said, “We expect to continue delivering record performance in the second quarter, with each business segment meaningfully contributing to profitability.”

The company expects its Flat-Rolled segment to witness strong demand, while the Tubular segment’s adjusted EBITDA is expected to rise due to better selling prices and strong demand for seamless pipes from the energy market.

Despite the hike in raw material prices arising out of the Ukraine – Russia war, the U.S. Steel Europe segment’s adjusted EBITDA is expected to grow as the rising costs will likely be offset by higher selling prices.

The company announced that it would likely utilize its surplus cash by rewarding its shareholders with share repurchases in the near term. “Our focus on strategic end markets and the continued realization of significantly increased fixed-price contracts is again expected to generate another quarter of record performance,” added Burritt.

X’s shares have declined 16.4% in price year-to-date and 12.4% over the past year to close the last trading session at $19.89.

Here’s what could influence X’s performance in the upcoming months:

Robust Financials

X’s net sales increased 42.8% year-over-year to $5.23 billion for the first quarter ended March 31, 2022. The company’s adjusted net earnings increased 214.8% year-over-year to $891 million. Also, its adjusted EPS came in at $3.05, representing an increase of 182.4% year-over-year. In addition, its adjusted EBITDA increased 142.6% year-over-year to $1.33 billion.

Unfavorable Analyst Estimates

Analysts expect X’s EPS for fiscal 2022 and 2023 to decline 22% and 67.7% year-over-year to $10.52 and $3.40, respectively. Its revenue for fiscal 2023 is expected to decrease 23% year-over-year to $16.29 billion.

Discounted Valuation

In terms of forward EV/EBITDA, X’s 1.36x is 78% lower than the 6.20x industry average. Its forward non-GAAP P/E of 1.75x is 82.8% lower than the 10.24x industry average. Also, the stock’s 0.31x forward EV/S is 78% lower than the 1.42x industry average.

High Profitability

In terms of trailing-12-month net income margin, X’s 22.73% is 158.8% higher than the 8.78% industry average. Likewise, its 1.29% trailing-12-month asset turnover ratio is 81.8% higher than the industry average of 0.71%.

Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROA came in at 69.32%, 27.40%, and 25.83%, compared to the industry averages of 12.91%, 7.36%, and 5.22%, respectively.

POWR Ratings Show Promise

X has an overall rating of B, equating to a Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, which each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. X has an A grade for Value, in sync with its 1.63x forward EV/EBIT, which is 82.2% lower than the 9.18x industry average.

It has a B grade for Quality, consistent with its 10.18% trailing-12-month levered FCF margin, 82.2% higher than the 5.59% industry average.

X is ranked #23 of 32 stocks in the A-rated Steel industry. Click here to access X’s Growth, Momentum, Stability, and Sentiment rating.

Bottom Line

X reported record earnings and revenues for the first quarter ended March 31, 2022, and the company is confident in reporting its best-ever earnings and adjusted EBITDA in the second quarter. Given X’s discounted valuation, higher-than-industry profitability, and robust financials, we think adding this stock to your portfolio could be wise.

How Does United States Steel Corporation (X) Stack Up Against its Peers?

X has an overall POWR Rating of B, equating to a Buy rating. You might want to consider investing in the following Steel stocks with an A (Strong Buy) and B (Buy) rating: Voestalpine AG (VLPNY), Acerinox, S.A. (ANIOY), and Russel Metals Inc. (RUSMF).

X shares rose $0.36 (+1.81%) in premarket trading Tuesday. Year-to-date, X has declined -16.12%, versus a -22.73% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
XGet RatingGet RatingGet Rating
VLPNYGet RatingGet RatingGet Rating
ANIOYGet RatingGet RatingGet Rating
RUSMFGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com

Will Stocks Continue to Rise...Or Time for Rug Pull?

It’s hard not to celebrate each new high for the S&P 500 (SPY). Yet with high inflation not dead and buried then perhaps this stock market celebration is a tad early. That is why you need to hear what 44 year investment veteran Steve Reitmeister is saying about what comes next for the stock market and how to stay on the right side of the action. Read on below for more...

4 Software Stocks Primed for Major Upside in 2024

The software industry is thriving, buoyed by digital transformation, soaring demand for cloud solutions, and the integration of advanced technologies like AI and ML, presenting lucrative opportunities for savvy investors. So, let’s look at tech stocks SS&C Technologies (SSNC), Informatica (INFA), Verint Systems (VRNT), and Yext (YEXT) poised for significant upside in 2024. Read on…

3 Pharma Stocks Primed for May Investment Opportunities

The pharma industry is poised for tremendous growth driven by surging healthcare needs, the introduction of groundbreaking medications, and relentless technological innovation. Hence, quality pharma stocks Collegium Pharmaceutical (COLL), Green Thumb Industries (GTBIF), and Bristol-Myers Squibb (BMY) emerge as prime investment options this month. Read more…

3 Bargain Internet Stock Buys for Savvy Investors

The increased internet penetration is reshaping various industries, driving digital transformation, connectivity, and access to services like e-commerce, remote work, and online entertainment. Thus, robust internet stocks Jamf Holding (JAMF), Upwork (UPWK), and TrueCar (TRUE), which are trading at discounts to their peers, could be ideal buys. Keep reading…

2 Paths for Stocks from Here

The recent rally for the S&P 500 (SPY) is nice to see. However, it is quite possible this is the end of the line for recent stock gains with more downside ahead. To explain the 2 distinct possibilities for stocks at this time is 44 year investment veteran Steve Reitmeister who shares this updated marketing outlook with trading plan and top picks in the article below...

Read More Stories

More United States Steel Corporation (X) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All X News