U.S. Steel Surges Most in 7 Months as Investors Cheer Buyback

(Bloomberg) -- The unprecedented rally in steel prices is finally paying off for U.S. Steel Corp. investors.

Shares of the American steelmaker surged as much as 15% Friday after the company announced a $300 million stock repurchase program and issued a 5-cent dividend, saying the excellent gains of the last few quarters allowed them to finally reward stockholders. The company provided upbeat outlook for next year, saying they expect the average selling price of steel to its customers will be higher in 2022 than this year.

“Today, given undeniable progress we’ve seen over the past several quarters, we are announcing enhancements to our capital allocation priorities that begin to directly reward stockholders with the improvements we’ve made to the business,” Chief Executive Officer Dave Burritt said in a call with analysts. “We believe the market is not rewarding us for the strong performance we expect in 2022.”

The historic rise in prices, driven by surging demand from reopening economies and chaotic supply chains limiting customers’ ability to get their hands on metal, are behind the resurgence in U.S. Steel’s earnings since the depths of the pandemic. Analysts expect the company to post its best-ever annual profit, with shares on Friday gaining the most in more than seven months.

The company also said during the call that it will produce up to 500,000 annual tons of pig iron at its Gary Works facility in Indiana to supply electric arc furnaces. The company said a potential partner would fund, install and operate the asset.

U.S. Steel’s adjusted earnings before items were $2.03 billion, according to a Thursday statement, beating the $2.01 billion average estimate of Wall Street analysts.

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