NEW YORK (TheStreet) --U.S. Steel (X - Get Report) was upgraded to "buy" from "hold" at Deutsche Bank (DB - Get Report) this morning after the company's better than expected second quarter results and the Carnegie Way transformation, the company's latest adaptation of its business model in a competitive effort to be more sustainable and efficient.
The firm raised its price target on U.S. Steel shares to $40 from $28.
"Management expects third quarter 2014 results to improve significantly as operations normalize. Lack of weather related challenges to generate favorable impact of $150 million for U.S. flat-rolled segment. The company continues to make headway in its Carnegie Way program with new projects implemented in second quarter 2014 expected to drive additional benefits of $145 million ($435 million total) in 2014," analysts said.
U.S. Steel reported earnings of 17 cents per share, up from losses of 54 cents per share a year ago. Second quarter revenue was $4.4 billion.
Shares of U.S. Steel are currently up 0.81% to $33.71
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TheStreet Ratings team rates UNITED STATES STEEL CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED STATES STEEL CORP (X) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 77.77% and other important driving factors, this stock has surged by 93.02% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Net operating cash flow has significantly increased by 418.54% to $783.00 million when compared to the same quarter last year. In addition, UNITED STATES STEEL CORP has also vastly surpassed the industry average cash flow growth rate of -23.29%.
- UNITED STATES STEEL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UNITED STATES STEEL CORP reported poor results of -$11.68 versus -$0.97 in the prior year. This year, the market expects an improvement in earnings ($1.04 versus -$11.68).
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, UNITED STATES STEEL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for UNITED STATES STEEL CORP is currently extremely low, coming in at 3.14%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.40% is significantly below that of the industry average.
- You can view the full analysis from the report here: X Ratings Report