U.S. Steel Sees Return to Profit

U.S. Steel says it will return to profitability in the second quarter, but its shares sink along with the broader markets.
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(U.S. Steel earnings item updated with further detail from the company's quarterly report and for closing stock prices.)

PITTSBURGH (

TheStreet

) --

U.S. Steel

(X) - Get Report

posted a narrower-than-expected loss for its first quarter and said it will return to profitability in the second period after spilling red ink for more than a year.

The catchwords for U.S. Steel this time around were "gradually improving business conditions." The company joined the likes of industrial giants

Nucor

(NUE) - Get Report

,

Freeport McMoRan

(FCX) - Get Report

and

Caterpillar

(CAT) - Get Report

with suggestions of economic recovery.

Though U.S. Steel, which

disappointed investors with its last quarterly report in January

, gave no quantitative guidance for the second quarter or the year, U.S. Steel boss John Surma said, "We continue to experience healthy order rates from most of our end markets, resulting in increased production levels."

Surma also noted that steel inventories in important end markets in the U.S. and Europe remain at historic lows.

For the first quarter, U.S. Steel lost $157 million, or $1.10 a share, an improvement over the year-ago period's loss of $439 million, or $3.78 a share. Analysts were expecting the steelmaker to lose $1.40 a share, according to

Thomson Reuters

.

U.S. Steel also beat estimates on the top line, reporting revenue of nearly $3.9 billion, up 16% from a year ago. The consensus on the sell side was for revenue of $3.75 billion.

The results and outlook were encouraging to some industry observers. Standard & Poor's analyst Leo Larkin upgraded U.S. Steel stock to buy from sell, based on valuation. Mark Parr, an analyst at KeyBanc Capital Markets, wrote in a note to clients Tuesday morning before the bell that "we expect a positive market reaction to this release."

But the company's conference call with analysts and investors, which started at 2 p.m. EDT, may have put a damper on the early enthusiasm.

More on Steel

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Scott Rothbort, president of LakeView Asset Managment and a

RealMoney

contributor, noted in a column Tuesday afternoon that

U.S. Steel executives on the call

"could not provide any clear evidence nor did the company sound very enthusiastic about the second quarter or the rest of the year. Rather, management provided desultory comments about sequential improvements." Thus, Rothbort went on, the selloff in U.S. Steel shares Tuesday.

But the declines were general across equities markets during the session as debt fears from Greece and Portugal once again spooked traders around the world.

The Dow Jones Industrial Average plunged more than 200 points and, by the close of Tuesday's session, U.S. Steel's stock price had fallen 5.7%, or $3.44, to $56.63, on volume of 23.3 million shares. Daily turnover has averaged 18.5 million shares over the last three months.

The steel sector especially came under heavy selling pressure Tuesday. Nucor shares declined 2.5%,

Steel Dynamics

(STLD) - Get Report

fell 4.8%, and

AK Steel

(AKS) - Get Report

retreated 8.2%.

AK Steel late Monday disclosed

that its raw materials costs might spike, possibly hurting its profit, since 25% of its coking coal was to be supplied by the Massey Energy mine that exploded earlier this month.

-- Written by Scott Eden in New York

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>>Nucor Beats, Says Outlook Improving

>>Caterpillar's Polarizing Outlook

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.