U.S. Steel announced a new $500-million stock buyback, highlighting its transformed balance sheet while reporting fourth-quarter earnings late Thursday. EBITDA came in above mid-December guidance, and revenue topped estimates, but reported EPS came up short. X stock rose Friday.
"2021 was a year of records and we delivered with record earnings and free cash flow and record safety, environmental, quality, and reliability performance," CEO David Burritt said in the earnings statement. "We enter 2022 from a position of strength and are relentlessly focused on continuing our disciplined approach to creating stockholder value."
Early Thursday, Nucor reported record earnings that topped fourth-quarter estimates, though sales were a bit light. The steelmaking giant signaled a strong start to 2022, though not quite as great as late last year. NUE stock rose in Thursday stock market action.
On Monday, Steel Dynamics topped Q4 estimates and predicted that "North American steel consumption will experience steady growth" in 2022.
But the STLD earnings announcement "lacked other positive commentary contained in recent releases," noted BMO Research analyst David Gagliano.
The impact of growing supply on steel prices — forced to their highest levels in more than a decade late last year — remains the key question.
"Steel stocks could continue to remain under pressure until US HRC (hot-rolled coil) corrects to a more normalized level," wrote Deutsche Bank analyst Sathish Kasinathan after the STLD report.
U.S. Steel Earnings
U.S. Steel reported EBITDA (earnings before interest, taxes, depreciation and amortization) of $1.728 billion, above Dec. 16 guidance of $1.65 billion. Adjusted EPS of $3.64 reversed a year-ago loss but was shy of $4.56 estimates, according to Zacks Investment Research. Revenue surged 119% to $5.622 billion, ahead of $5.48 billion views.
U.S. Steel sounded upbeat about its competitive position and strategic investments, but didn't offer guidance for 2022.
X Stock
X stock rose 5.1% to 19.54. Still, that move leaves U.S. Steel well below its 50- and 200-day moving averages.
Despite its transformation, U.S. Steel stock has been a laggard. Its 30 Relative Strength rating means it has outperformed just 30% of all stocks over the past 12 months.
After flirting with breakouts in June, August and November, X stock has been underperforming the S&P 500 since August, reflected in its downsloping relative strength line.
Nucor Earnings
Estimates: Analysts expected Nucor to earn $7.82 per share in Q4, up 500% from a year ago. Revenue was seen doubling to $10.56 billion.
Results: Nucor EPS rose to $7.97 on sales of $10.36 billion.
Outlook: "We are confident that 2022 will be another year of strong profitability for Nucor," the company said in its earnings statement, though it stopped short of predicting record profits.
Nucor said operating earnings would be "slightly reduced" from Q4's record in the first quarter of 2022. Analysts looked for an EPS outlook of $6.65, nearly 17% below Q4's result. However, Nucor noted that diluted earnings per share would get a lift from fewer shares outstanding due to stock buybacks.
NUE Stock
NUE stock made a brief run to 126.67, a record high, in early January. But it's since fallen into bear market territory, like most steel stocks.
Nucor stock rose 3.15% to 99.79 on Friday, after popping 4% on Thursday, but that still leaves it well shy of its 200-day line, which it knifed through on Jan. 20.
Nucor still has an 89 Relative Strength Rating. That means it has outperformed 89% of stocks over the past 12 months. But NUE likely faces a period of consolidation as steel prices stabilize after hitting heady levels in 2021.
Commercial Metals is one steel stock that has held above its 200-day line. CMC stock has an excellent 98 IBD Composite rating, a single rating that combines both technical and fundamental factors.
