Steel Stock in Rally Mode Ahead of Earnings

X has added over 22% this month

Digital Content Manager
Oct 26, 2022 at 2:28 PM
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U.S. Steel Corporation (NYSE:X) will report third-quarter earnings ahead of the open on Friday, Oct. 28. The security is rallying ahead of the event, last seen up 3.5% at $22.17 and set for its first close back above the 60-day moving average for the first time since mid-September. It's been a relatively upbeat month for the equity. In fact, X has added 22.1% in October so far, looking to nab its first monthly win in three. Below, we'll dig into U.S. Steel stock's post-earnings past, as well as what Wall Street is expecting ahead of this Friday's event. 

x oct 26

Looking back two years, or eight reports, X has managed a positive return after five, but fell lower following three of these events. Regardless of direction, the steel stock has averaged a 5.7% next-day move, which is much smaller than the 10.6% swing the options pits are pricing in this time around. 

Speaking of options pits, U.S. Steel's have been pretty pessimistic. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 50-day put/call volume ratio of 1.03, which sits higher than all but 2% of readings from the past year. This means long puts are being picked up at a quicker-than-usual clip right now

The security's Schaeffer's put/call open interest ratio (SOIR) echoes this sentiment, as it sits at 1.57 and ranks higher than 99% of annual readings. In other words, short-term options players have rarely been more put-biased. 

Sentiment among analysts has also been pessimistic. Of the five covering X, three say "hold," and two day "strong buy." Meanwhile, shorts have been building their positions, up 13.9% in the last reporting period. The 36.86 million shares sold short now make up a hefty 15.7% of the stock's available float, or over three days' worth of pent-up buying power. 

 

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