Post by
Jasonuw on Oct 29, 2021 9:23am
EPS Estimates & Prices Realized
We've had several US Steel producers announce results (US Steel today) and their prices realized are below current spot or prices during Q3. On average I am seeing $1320 USD across the 4 Steel Producers I follow. This a result of long term contracts that the mills sign. Silver lining is the higher prices for longer rather than 1 quarter blip. If I use 1320 USD in my estimate for Q3, I see about 650 million CAD profit before tax. I have no idea what the conditions are on using the tax attributes but let's say there are 2 scenarios. 1 (No tax). EPS of $8.2 CAD per share. 2 ( 25% Tax) EPS of 6.1 CAD per share. If they had ~ 250 million in Cash at end of Q2, used 400 million to buy back 13% of the shares and now have earned 650 million ( no tax scenario). They should be sitting on 500 million of Cash on the balance sheet. About 15% of their market cap. I say that because I like limiting my downside risk. If a company has that much cash, it puts a floor on their share price. Anyways. Bottom line is EPS forecast of $8.2. Anybody else want to post their EPS estimates?
Comment by
marsman1 on Oct 29, 2021 10:00am
Your $1320 is far too low IMO . Every company has their own stratgey as to how to sell their steel. STELCO has said , a few times that they are selling into the spot market , so that $1320 U S could easily be $1600 - $1900 U S . If so the earnings will be higer than your seniro.
Comment by
Jasonuw on Oct 29, 2021 10:37am
So the midpoint of your easily achieved range is 1750 USD. With a exchange rate of 79.5 cents that we saw in Q3, you're saying Stelco realized 2200 CAD on their steel? How do you figure that when Alan said Q4 might be able to go over 2000 CAD? Seems like he wasn't committing to Q3.