Algo Trading: United States Steel Corporation (X) is on the Rise

BlairThe article was written by Blair Goldenberg, a Financial Analyst at I Know First, and enrolled in a Masters of Finance at Colorado State University.

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United States Steel Corporation (X)

Summary

  • United States Steel Corp. (X) Background
  • United States Steel Corp. Rating
  • Release of Q3 Earnings
  • I Know First Algo Trading

Background

United States Steel Corporation (U. S. Steel) is an integrated steel producer. The Company is engaged in producing flat-rolled and tubular products with production operations in North America and Europe. The Company operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE) and Tubular Products (Tubular). The Flat-Rolled segment includes the operating results of U. S. Steel’s integrated steel plants and equity investees in the United States involved in the production of slabs, rounds, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States. The USSE segment includes the operating results of U. S. Steel Kosice (USSK), U. S. Steel’s integrated steel plant and coke production facilities in Slovakia. The Tubular segment includes the operating results of U. S. Steel’s tubular production facilities, primarily in the United States, and equity investors in the United States and Brazil.
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United States Steel Corp. Rating

United States Steel Corp. (X) was recently upgraded from a “hold” rating to a “buy” rating last Wednesday. The company currently has a $26.00 price target on the stock, according to Jefferies Group, up $8.50 from their previous price target of $17.50. At market close on Friday, November 11, 2016, X stands at  $25.71 per share, which is up 1.05 points or 4.26%.

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Many analysts have been watching X recently. Credit Suisse Group set a $29.00 price target on X and gave them a “buy” rating on Wednesday, July 27th. Bank of America Corp. set a $21.00 price target and changed United States Steel Corp. from a “neutral” rating to an “underperform” rating. Other analysts from Argus and Credit Agricole are watching X; Argus changed their rating to a “buy” rating and Agricole issued a “sell” rating for X.

I Know First Algorithm is currently also bullish on X in short and long terms.

Within the company, investors seem optimistic about X. Many investors within the company are buying more shares. Specifically, director Girsky Stephen had spent approximately $37,880 on shares, which equates to about 2,000 shares. He bought the shares at $18.90 a share. The importance of analyzing insiders that invest, or sell their shares is that it reflects what may be happening in the company. If a director invests more into the company, that may mean that they expect business to increase which will ultimately affect the stock price in a positive light. No one knows their company better than the insiders and watching how they react to the company is one of the best ways to understand the health of the company.

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Release of Q3 Earnings

On Tuesday, November 1, X released its Q3 earnings and the results are as follows:

  • The company reported revenue of $2.69 billion for the third quarter of 2016.
  • This down from the $2.83 billion the company reported in the third quarter of 2015.
  • Wall Street was expecting revenue of $2.82 billion for the quarter.
  • Earnings per share reported by United States Steel Corporation was 32 cents.
  • The company reported losses per share of $1.18 during the same time of the year prior.
  • Analysts were expecting the company to report earnings per share of 80 cents for the quarter.
  • The steel company reported net income of $51 million for the third quarter of 2016.
  • Net loss reported by the company in the third quarter of 2015 was $173 million.
  • The company had $1.4 billion of cash and $3.1 billion of total liquidity as of Sept. 30, 2016 (Retrieved from InvestorPlace).

CEO Mario Longhi stated about the Q3 earnings that “our third quarter results improved significantly from the second quarter as each of our segments improved, resulting in our highest quarterly segment income since the fourth quarter of 2014.” However, it seems that the company is also down from Q3 of last year in revenue. Q4 earnings are projected at a loss of $2.26 for the year. So while CEO Mario Longhi describes the Q3 earnings as a highlight since 2014, it is still down for the year. Investors should expect the price per share to rise though due to the fact that insiders in the company are buying low and due to new Chinese tariffs being enacted after U.S. Trade Regulators found that Chinese steel manufacturers used a loophole in which China began shipping their steel through Vietnam to avoid the antidumping tariffs imposed on China.

I Know First Algo trading

Below you can find the forecast for the package name Basic Industry. In the last year, X has received 157.48% returns, with a signal strength of 34.31 and a predictability of 0.65. I Know First’s also trading predicted the bullish returns correctly. Previously, I Know First also predicted the bullish returns on February 18, 2016, which created a quick win for X.

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