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United States Steel Corp. (X)

Jun 29 2008

United States Steel Corp. (X)

Steel prices continue to rise as China needs more. US Steel Corp is riding the rising price of steel to new levels of profitability and market capitalization.

Better Than the Competition

            This week the CEO of US Steel, John Surma, explained the rising price of iron ore to the industry driving prices of the finished product higher. But he also told of the advantage US Steel has as most of its iron ore comes from internal sources and therefore the costs are controlled.

Analysts have raised Expectations

            Studying the earnings expectations by the analysts, US Steel looks like a quickly growing company in a very strong industry. Analysts have raised the company’s expected earnings for the current quarter 28% over the past three months. And they have raised the yearly earnings expectations 41% over the same time frame.

Not Perfect

            The company has managed to miss their last three quarters, by small amounts on two of the three. If there’s a downside to the growing large cap steel producer, it’s that they cannot meet analyst’s expectations. In March of the current year, US Steel missed earnings expectations by 2.2% when analysts were looking for 1.81 per share and the company delivered 1.77 per share.

The Trade

            In spite of recent quarterly earnings misses, the company is showing incredible growth in an industry that is one of the strongest is a weak domestic economy.

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