POSCO (NYSE:PKX) Posts Quarterly Earnings Results, Beats Expectations By $0.45 EPS

POSCO (NYSE:PKX) issued its quarterly earnings results on Thursday. The basic materials company reported $1.30 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.85 by $0.45, Zacks reports. The business had revenue of $12.43 billion for the quarter, compared to analyst estimates of $12.05 billion. POSCO had a net margin of 1.19% and a return on equity of 1.34%.

Here are the key takeaways from POSCO’s conference call:

• Second-quarter earnings improved: Consolidated revenue rose to KRW 19.3 trillion and operating profit increased 16% quarter over quarter to KRW 819 billion, with gains across steel, rechargeable battery materials and energy.
• POSCO Argentina’s lithium operation achieved its first-ever quarterly operating profit, while the broader rechargeable battery materials segment returned to surplus after eight consecutive quarters of losses. Management expects a stronger fourth quarter as Plant 1 returns to full operation, certified-product sales begin and Plant 2 ramps up.
• Steel profitability is expected to improve in the third quarter through higher production, sales volumes, pricing and fixed-cost absorption, although raw-material, energy, foreign-exchange and trade-policy volatility remain significant risks. POSCO is gradually pursuing price increases across automotive, shipbuilding and electronics markets.
• Restructuring generated KRW 475.4 billion of additional cash in the first half, aided by divestments of loss-making Chinese steel assets; management targets KRW 3.5 trillion in cumulative free cash flow by 2028. POSCO International also posted record quarterly and half-year operating profit.
• Lithium performance remains uneven, with the Pilbara hard-rock operation pressured by unfavorable spodumene-to-lithium-hydroxide price spreads and Argentina facing a temporary third-quarter production slowdown for equipment repairs. The group also reported another fatality at POSCO E&C and continues to face European quotas, anti-dumping investigations and tariffs affecting steel exports.

POSCO Price Performance

PKX traded down $1.39 during trading on Friday, reaching $53.10. 365,646 shares of the stock were exchanged, compared to its average volume of 288,884. The company has a debt-to-equity ratio of 0.28, a current ratio of 1.90 and a quick ratio of 1.30. The company has a market capitalization of $16.06 billion, a price-to-earnings ratio of 31.39 and a beta of 1.57. POSCO has a 1 year low of $44.99 and a 1 year high of $92.40. The business’s 50 day moving average price is $58.00 and its two-hundred day moving average price is $62.82.

Analyst Upgrades and Downgrades

A number of brokerages have weighed in on PKX. Weiss Ratings lowered POSCO from a “hold (c-)” rating to a “sell (d+)” rating in a report on Tuesday, June 23rd. UBS Group raised POSCO from a “neutral” rating to a “buy” rating in a research note on Monday, April 27th. Zacks Research upgraded POSCO from a “strong sell” rating to a “hold” rating in a research note on Monday, June 8th. Finally, Wall Street Zen lowered POSCO from a “buy” rating to a “hold” rating in a report on Saturday, June 20th. One equities research analyst has rated the stock with a Buy rating, one has given a Hold rating and one has given a Sell rating to the company. Based on data from MarketBeat.com, the stock has an average rating of “Hold”.

Institutional Inflows and Outflows

Several hedge funds and other institutional investors have recently made changes to their positions in the company. AQR Capital Management LLC grew its stake in POSCO by 8.3% in the 1st quarter. AQR Capital Management LLC now owns 6,462 shares of the basic materials company’s stock valued at $307,000 after acquiring an additional 495 shares during the last quarter. Goldman Sachs Group Inc. raised its position in POSCO by 57.3% during the first quarter. Goldman Sachs Group Inc. now owns 423,253 shares of the basic materials company’s stock worth $20,117,000 after acquiring an additional 154,100 shares during the last quarter. Quantinno Capital Management LP lifted its holdings in shares of POSCO by 59.2% in the second quarter. Quantinno Capital Management LP now owns 49,505 shares of the basic materials company’s stock valued at $2,401,000 after purchasing an additional 18,403 shares in the last quarter. Raymond James Financial Inc. acquired a new stake in shares of POSCO in the second quarter valued at approximately $95,000. Finally, BNP Paribas Financial Markets grew its position in shares of POSCO by 8.0% in the second quarter. BNP Paribas Financial Markets now owns 259,374 shares of the basic materials company’s stock valued at $12,577,000 after purchasing an additional 19,312 shares during the last quarter.

POSCO Company Profile

POSCO (NYSE: PKX) is a South Korea–based integrated steel producer founded in 1968 as Pohang Iron and Steel Company. Headquartered in Pohang, the company grew rapidly as part of South Korea’s industrialization program and developed large, integrated steelworks—most notably in Pohang and Gwangyang—that helped establish POSCO among the world’s largest steelmakers. It is structured as a diversified industrial group with steelmaking at its core and a range of downstream and trading businesses.

The company’s primary activities include ironmaking and steelmaking, producing a wide array of steel products such as hot-rolled and cold-rolled sheets, coated steels, plates, stainless and special steels, long products (bars and wire rods), and seamless pipes.