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The Zacks Analyst Blog Highlights:United Parcel Services, United States Steel, Carpenter Technology, Companhia Siderurgica Nacional and ArcelorMittal

CHICAGO, Jan. 21, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the United Parcel Services Inc. (NYSE:UPS-Free Report), United States Steel Corp. (NYSE:X-Free Report), Carpenter Technology Corporation (NYSE:CRS-Free Report), Companhia Siderurgica Nacional (NYSE:SID-Free Report) and ArcelorMittal (NYSE:MT-Free Report).

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Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday's Analyst Blog:

UPS Hints at Weak Q4

Major freight forwarding carrier United Parcel Services Inc. (NYSE:UPS-Free Report) announced that a compressed peak season, a boom in online shopping and unfavorable December weather are going to hurt its fourth quarter 2013 profits.

The company's fourth quarter preliminary results point to diluted earnings per share (EPS) of $1.25, which is way below the Zacks Consensus Estimate of $1.42.

For full-year 2013, the company expects adjusted diluted EPS of $4.57, lower than $4.65–$4.85 guided in July 2013. The forecast is also way below Zacks Consensus Estimate of $4.75. United Parcel will report its earnings on Jan 30, before market opens.

A late Thanksgiving Day cut short the holiday shopping season. Then the last-minute online shopping surge just before Christmas created a menace for the company. The express carrier hired 85,000 temporary employees, 30,000 more than planned, to maintain service standards and commitments. What followed was a snowball effect that ended up in higher costs.

The Atlanta-based company also cited a harsh weather with heavy snowfall as the primary reason for the disappointing fourth quarter.

However, on Dec 23, United Parcel delivered 31 million packages, which was 13% more than last year's peak day and 7.5% ahead of its expectation. Additionally, the company is optimistic about 2014 and expects a 10–15% surge in diluted earnings, which is in tune with its long-term target.

The online shopping craze and recent rate hikes within the U.S., Canada, and Puerto Rico and among these markets are expected to benefit the company's 2014 results. Thus despite a weak guidance for the full year, these positives hold the stock from a major slide. It declined a mere 0.6% on Friday's trade on Nasdaq.

We also see reflections of a sluggish worldwide economic condition in the reduced earnings guidance for 2013. However, World Bank's recent global GDP forecast of 3.2% bodes well for the company as the success of logistics companies depends upon worldwide economic development.

U.S. Steel Upgraded to Strong Buy

Zacks Investment Research has upgraded steel company United States Steel Corp. (NYSE:X-Free Report) to a Zacks Rank #1 (Strong Buy).

Why Upgraded?

Though U.S. Steel incurred loss in third-quarter 2013, as reported on Oct 28, due to a hefty impairment charge, adjusted loss was narrower than the Zacks Consensus Estimate. The company has delivered positive earnings surprises in three out of the last four quarters with an average beat of 15.47%.  U.S. Steel's long-term estimated earnings per share growth rate is 14.4%.

U.S. Steel's Flat-rolled segment posted a profit of $82 million in the third quarter compared with a profit of $29 million in the year-ago quarter and a loss of $51 million in the second quarter of 2013. 

The company is actively engaged in improving its cost structure and sustainably increasing revenues through its "Project Carnegie" initiative, which includes measures like shutdown of operations. These efforts are expected to deliver over $75 million in cost improvements annually.

U.S. Steel is experiencing strong demand in the automotive space. In early 2013, the company collaborated with specialty alloy maker Carpenter Technology Corporation (NYSE:CRS-Free Report) to develop lighter high-strength steel for automotive applications. The association will generate growth opportunities in the automotive market.

Further, in May 2013, U.S. Steel and Japan's Kobe Steel commissioned a new continuous annealing line at their joint venture, PRO-TEC Coating Company. The 500,000-ton PRO-TEC continuous annealing line will produce the next generation of Advanced High Strength Steels (AHSS) and Ultra High Strength Steels (UHSS) having the superior strength, flatness and formability which were earlier unavailable at these levels. 

U.S. Steel is also looking for opportunities related to the availability of reasonably priced natural gas as an alternative to coke in the iron reduction process, to improve its cost competitiveness while reducing its dependence on coal and coke in the long term. The company is also expanding its coke-making capabilities. It has taken a number of steps in order to ensure long-term access to high quality coke for its blast furnaces.

Other Stocks to Consider

Other players in the steel industry worth considering are Companhia Siderurgica Nacional (NYSE:SID-Free Report) and ArcelorMittal (NYSE:MT-Free Report). Both carry a Zacks Rank #1 (Strong Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

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Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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