US Steel (X  ) announced Q3 results that beat estimates on the top and bottom-line. Shares finished 13% higher and have continued to trend higher in ensuing sessions. It also continued a trend this quarter of North American-based commodity companies reporting strong results and seeing hefty gains in shares.

Inside the Numbers

In Q3, US Steel reported $5.36 per share in earnings which easily topped expectations of $4.85 per share. It was also a major improvement from last year's Q3 EPS of a loss of $1.06 per share. Of course, the major factor in this turnaround is the increase in steel prices over the last year in addition to higher volumes.

Revenue increased by 155% compared to last year's Q3, reaching $5.9 billion. This was a slight beat compared to consensus expectations of $5.7 billion. The company added that in Q3, steel shipment volumes were 37% higher compared to the previous year.

The positive reaction in US Steel's share price was likely due to the company announcing $300 million in buybacks and hiking the dividend from $0.01 a share to $0.05 per share. Both moves are evidence that the company is now more focused on returning cash to shareholders rather than increasing production as it had done for much of the past decade.

Another factor adding to the bullish mood was management's upbeat commentary. CEO David Burritt said, "We continue setting records, including record net earnings, record Ebitda, record Ebitda margin, record liquidity, record safety, and record quality and reliability. Our balance sheet has been transformed and the cash flow generation of the business has us highly confident in our ability to pre-fund organic growth investments."

Stock Price Outlook

Despite recent strength in steel prices, US Steel does have some potential catalysts with expectations that auto production should return to 18 million cars produced per month vs the current 13 million per month. Additionally, there are signs of increasing activity in terms of domestic oil production. This could also be another source of steel demand. Finally, the infrastructure bill is another source of potent demand as well.

The major headwind for US Steel is that over the last few months, many of its competitors are aggressively investing to bolster supply. This has been one source of weakness for the steel sector over the last couple of months. Although more production is somewhat bearish, it should be offset by increasing demand.