U.S. Steel’s Q3 Revenue & Earnings Outperform Expectations; Shares Rise 7%

Strong net sales enabled United States Steel Corporation (X) to exceed expectations in the third quarter of 2021. The steel company also raised its quarterly dividend by 400%, pushing the shares up 7.2% during the extended trading session on Thursday.

The company registered adjusted earnings per share (EPS) of $5.36, beating the consensus estimate of $4.81. It had reported a loss of $1.21 per share in the same quarter last year.

Additionally, revenues during the quarter more than doubled on a year-over-year basis to $5.96 billion, exceeding analysts’ expectations of $5.79 billion. Meanwhile, adjusted EBITDA came in at $2.03 billion.

Segment-wise, net sales for Flat-Rolled and U.S. Steel Europe rose significantly to $1 billion and $394 million, respectively, on a year-over-year basis.

Mini Mill segment recorded net sales of $424 million in the third quarter. The segment was added in January after buying out the remaining equity interest in Big River Steel.

The CEO of U.S. Steel, David B. Burritt, said, “We are confident in the long-term value our new, highly capable mini mill will create as it further expands our competitive advantage to produce sustainable and differentiated steel.” (See United States Steel stock charts on TipRanks)

Capital Deployment

The company’s Board of Directors announced an increased quarterly cash dividend of $0.05 per share of the company’s common stock, up 400% from the last payout. The new dividend will be paid on December 9 to shareholders of record as of November 8. The company’s annual dividend of $0.20 per share now reflects a dividend yield of 0.86%.

U.S. Steel also authorized a new share repurchases program worth $300 million.

Burritt said, “Today’s announcement demonstrates the significant progress we have made in the execution of our Best for All strategy. We have made substantial progress on our announced deleveraging plans and expect to complete our incremental $1.0 billion target by the end of the year and ahead of schedule.”

He added, “Our expected $3.1 billion of total 2021 deleveraging combined with our robust cash and liquidity position has also allowed us to confidently begin executing organic growth investments aligned with long-term value creation.”

Analysts Recommendation

Overall, the stock has a Hold consensus rating based on 2 Buys and 2 Sells. The average United States Steel price target of $28.25 implies 20.83% upside potential to current levels. Shares have increased 3.91% over the past six months.

Smart Score

According to TipRanks’ Smart Score system, U.S. Steel gets a 7 out of 10, indicating that the stock is likely to perform in line with market averages. (See Top Smart Score Stocks on TipRanks >>)

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