Stelco Holdings Inc T.STLC

RE:RE:Expected earnings

[geosan0]

I've been seeing a lot more interest on this thread so I decided to add my 2 cents worth.

The estimate posted by fishcarrier is not far off what management said during its Q1 conference call.  At that time, Alan K. mentioned that he was expecting Q2 earnings to be 3x more than Q1 earnings and that Q3 earnings would be 2x those expected for Q2.  He was almost bang on with the 3x for Q2, so I have no reason to think he won't be close to his estimate for Q3.  Based on Q2 numbers that translates to earnings of about $8.00 share. 

If some are wondering how he could have forseen Q2 earnings and also opine on Q3 earnings, it is because his order book is sold out months in advance.  So when he hosts his conference call in November to discuss Q3 earnings, he will (if asked) comment on how many months forward his order book is sold out.

Question I have for the board and thinking of submitting is when Stelco sells out its production months in advance what pricing it receives:
1. Spot price at time order is received;
2. Futures price at time order is received based on delivery date; or
3. Actual price at time order is delivered.

If it is 1. then earnings for Q4 and Q1 of next year will be known in advance.

Also, I see analysts are concerned with the future pricing of steel and accordingly assign a low multiple on this stock. What these analysts seem to forget is the enormous amount of cash that will be sitting on the balance sheet.  So, if this steel pricing lasts 1 more year than this company should have more than $20.00 per share on the balance sheet.  What value should be assigned to the stock based on normalized earnings after the cash is subtracted? At 2 years of this steel pricing this company can privatize itself with free cash flow.  Insane!!!!

Stay tuned for Q3 earnings.  Should be interesting!!!!