United States Steel Corporation (NYSE:X) just released its second-quarter report and things are looking bullish. United States Steel delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$5.0b, some 10% above indicated. Statutory EPS were US$3.53, an impressive 24% ahead of forecasts. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the ten analysts covering United States Steel are now predicting revenues of US$18.0b in 2021. If met, this would reflect a substantial 32% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to bounce 169% to US$10.28. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$18.2b and earnings per share (EPS) of US$10.39 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 11% to US$32.71. It looks as though they previously had some doubts over whether the business would live up to their expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on United States Steel, with the most bullish analyst valuing it at US$41.00 and the most bearish at US$21.40 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that United States Steel's rate of growth is expected to accelerate meaningfully, with the forecast 75% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 1.6% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 0.08% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that United States Steel is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on United States Steel. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for United States Steel going out to 2023, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 4 warning signs for United States Steel (2 are a bit concerning!) that you need to be mindful of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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