Will US Steel Create a Rerating of Battered Steel Stocks?

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Reliance Steel & Aluminum Co. (NYSE: RS) was last seen up 1.9% at $91.80, in a 52-week range of $68.62 to $97.41. Its market cap is $6.2 billion, and it has a Refinitiv consensus analyst target price of $92.44. The company reported earnings on the morning of April 25, and its shares had traded at $88.82 before the report and closed that day at $91.34. 2:00 UPDATE: shares were up 2.75% at $92.52.

Nucor Corp. (NYSE: NUE) was last seen up 2.1% at $57.12, with a $17.4 billion market cap. The consensus target price is $68.68, and the 52-week range is $49.79 to $68.84. Nucor reported earnings on the morning of April 23, and its shares were at $56.98 ahead of the report and up at $58.62 afterward. 2:00 UPDATE: Nucor was up 3.1% at $57.65.

Steel Dynamics Inc. (NASDAQ: STLD) was last seen up 2.6% at $32.57, with a consensus target price of $39.63. The market cap is $7.3 billion, and the 52-week range is $28.91 to $52.10. Steel Dynamics reported its earnings on the morning of April 22. Shares were at $33.96 ahead of the report and closed at $32.28 on that day. 2:00 UPDATE: Steel Dynamic was up 4% at $33.00.

AK Steel Holding Corp. (NYSE: AKS) was last seen up 4.6% at $2.43, in a 52-week range of $2.05 to $5.40. Its market cap is now just $771 million, and it has a consensus analyst target of $2.81. It reported its earnings on the afternoon of April 29, and its stock was at $2.46 ahead of that report, with the following day’s closing bell seeing it at $2.42. 2:00 UPDATE: AK Steel was up 9% at $2.535.

Cleveland-Cliffs Inc. (NYSE: CLF) was trading up 2.7% at $10.13 late on Friday morning, and it has a 52-week range of $7.22 to $13.10. The market cap is $2.8 billion, and the consensus target price is $13.32. Its earnings report was posted on the morning of April 25, and the shares were at $9.51 the day before and at $9.73 on earnings day’s close. It has seen its shares trade above $10.00 on all but one day since that earnings report. 2:00 UPDATE: Cleveland-Cliffs was up 3.85% at $10.24.

Commercial Metals Co. (NYSE: CMC) was last seen up 2.9% at $17.30, with a $2 billion market cap. The 52-week range is $15.23 to $24.95, and the consensus target price was last seen at $21.15. 2:00 UPDATE: Shares of Commercial Metals were up 4.9% at $17.63.

One position that is not participating in the steel sector rally is Gibraltar Industries Inc. (NASDAQ: ROCK). Its revenues exceeded guidance on Friday morning, but the 5.6% sales gain also came with earnings with net income down 25%. On an adjusted basis that analysts use, the net income and diluted earnings per share were up 10.8% and 7.7%, respectively. The stock was last seen trading down 3.5% at $38.62, in a 52-week range of $31.96 to $49.10. The market cap is $1.24 billion, and the consensus target price was last seen at $46.75.

Olympic Steel Inc. (NASDAQ: ZEUS), with its mere $187 million market cap, was up over 5% at $17.01, in a 52-week range of $13.72 to $24.23.

By and large, the steel sector remains out of favor in 2019. A rerating with higher price targets and stronger analyst ratings likely would require more than just one improvement on the macro front for the time being. That said, the report might be strong enough to clear out some short sellers if they have seen profits already from their downside bets made in prior months.

To put this into further context, shares of U.S. Steel had been down about 20% so far in 2019, and while the remaining larger companies had all been up for 2019, only Cleveland-Cliffs had handily outperformed the market with a 28% gain. All the other larger names were up in the single-digit percentages, compared with gains of about 17% for the S&P 500 and about 13% for the Dow Jones industrials.

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