U.S. Steel (NYSE: X) stock price plunged 56% in the past twelve months. The drop in stock price is blamed on lower steel prices despite higher trade tariffs on imported steel.
Trading around $12 a share, U.S. Steel stock price is down significantly from a 52-weeks high of $30 a share.
The prospects for further downtrend increased sharply following lower than expected guidance for the third quarter.
The company recently anticipated a Q3 adjusted loss of $0.35/share. This is significantly higher from the analyst consensus for a loss of $0.07/share. The analysts are expecting third-quarter adjusted EBITDA in the range of $115M.
The lower than expects guidance for the third quarter is due to soft steel prices. The company says.” We see the impact of falling steel prices through Q2 and the larger than expected drop in scrap prices hurting flat-rolled earnings in H2 2019, with two blast furnaces expected to remain idled through at least the end of the year.”
Moreover, it expects pressure on its tubular segment for the rest of the year. This is because of high import levels and weaker demand conditions. The company has reduced full-year shipment guidance to 700K tons.
The company expects steel price to remain under pressure in the following two quarters. In addition, a bigger than expected drop in scrap prices could also negatively impact its Flat-rolled earnings in the following two quarters. Consequently, the company expects its two blast furnaces to remain idle during the final two quarters.
The sluggish market outlook and falling steel prices are likely to create a negative impact on consolidated financial numbers.
It’s stock price has already lost significant value in the past twelve months. The larger than expected decline in financial numbers could create more pressure on U.S. Steel stock price. Its dividend is also unsafe considering a bleak financial outlook. The company currently offers an annual dividend of $0.20 per share.