NEW YORK (TheStreet) -- Shares of U.S. Steel Corp. (X) are falling by 6.95% to $36.42 after hedge fund manager David Einhorn, who is betting on a decline in the share price, said results from the 2014 third quarter may have marked a peak for the company, Bloomberg reports.
"U.S. Steel temporarily benefited from panic ordering due to a shortage of raw materials, which led to a spike in hot rolled steel prices," Einhorn said today in a conference call discussing results at Greenlight Capital Re Ltd. (GLRE) , according to Bloomberg.
"Given the near-record spread between domestic steel prices and foreign steel prices, we believe that imports will arrive shortly, steel prices will retrace and U.S. Steel's great third quarter will likely be the best result it reports for a long time," Einhorn added.
On October 28, U.S. Steel posted third-quarter adjusted net income of $325 million, or $2.16 a share, compared to an adjusted net loss of $20 million, or a net loss of 14 cents per share a year ago.
Addtionally, in the company's outlook, U.S. Steel CEO Mario Longhi said he expected fourth quarter segment income from operations to decrease compared to the third quarter primarily due to significantly lower results for its flat-rolled segment.
Separately, TheStreet Ratings team rates UNITED STATES STEEL CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED STATES STEEL CORP (X) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, notable return on equity, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.2%. Since the same quarter one year prior, revenues rose by 11.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 88.4% when compared to the same quarter one year prior, rising from -$1,791.00 million to -$207.00 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Metals & Mining industry and the overall market, UNITED STATES STEEL CORP's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Powered by its strong earnings growth of 88.52% and other important driving factors, this stock has surged by 57.52% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- 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 ($3.46 versus -$11.68).
- You can view the full analysis from the report here: X Ratings Report