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Nucor (NUE) Sees Lower Q4 Earnings on Weaker Prices and Volumes
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Nucor Corporation (NUE - Free Report) has issued a downbeat guidance for the fourth quarter of 2022. The steel giant expects fourth-quarter earnings to be between $4.25 and $4.35 per share. This suggests a decline from $6.50 per share in third-quarter 2022 and $7.97 per share in the year-ago quarter. The company also noted that its full-year 2022 earnings remain on track to exceed the record earnings of $23.16 per share it set last year.
The company sees earnings to decline significantly in the steel mills segment on a sequential comparison basis in the fourth quarter. The expected decline is due to lower average selling prices, margin contraction and lower shipment volumes.
The biggest decline in profitability has been forecast at its sheet mills. The company expects shipments for its bar mills to be lower in the fourth quarter due to seasonal factors with customers lowering inventories as year-end approaches.
Nucor expects its steel products segment to deliver strong earnings in the fourth quarter. However, the segment’s earnings are projected to decline modestly on a sequential comparison basis on reduced selling prices and volumes. The company also noted that economic uncertainties and recession concerns could impact future demand.
Earnings for the raw materials unit are forecast to decline significantly in the fourth quarter compared with the third quarter due to lower profitability of the company’s DRI facilities and reduced selling prices for raw materials. Planned outages impacted the DRI facilities during the fourth quarter.
Nucor bought back roughly 3.1 million shares at an average price of $130.30 per share during the fourth quarter. It has repurchased 20.6 million shares year-to-date at an average price of $134.29 per share. It has returned around $3.3 billion to shareholders through share repurchases and dividend payments year to date.
Shares of Nucor are up 17.8% in the past year against a 0.7% decline of the industry.
Image Source: Zacks Investment Research
Nucor’s third-quarter 2022 earnings were impacted by lower profitability in the steel mills unit. Total steel mills shipments fell 10% year over year in the third quarter. Earnings of the company’s steel mills unit declined on a sequential comparison basis in the quarter, hurt by metal margin contraction and lower shipping volumes, especially at its sheet and plate mills.
The U.S. steel industry has lost momentum since April this year as steel prices have witnessed a significant downward correction after a massive spike in March 2022 following Russia's invasion of Ukraine.
U.S. steel prices have tumbled after surging to roughly $1,500 per short ton in April 2022 due to supply concerns stemming from the Russia-Ukraine war. The benchmark hot-rolled coil ("HRC") prices cratered to near the $600 per short ton level in November 2022. The downward drift partly reflects weaker demand.
Demand in the automotive market weakened due to the semiconductor crunch, hurting automotive production. The Russia-Ukraine war and soaring energy costs have also dwindled demand in Europe. Fears of a recession have also impacted U.S. HRC prices.
Better-ranked stocks worth considering in the basic materials space include Olympic Steel, Inc. (ZEUS - Free Report) , Commercial Metals Company (CMC - Free Report) and Steel Dynamics, Inc. (STLD - Free Report) .
Olympic Steel currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 4.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 25.4%, on average. ZEUS has rallied around 38% in a year.
Commercial Metals currently carries a Zacks Rank #1. The consensus estimate for CMC's current-year earnings has been revised 13.8% upward in the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. CMC has gained around 39% in a year.
Steel Dynamics has a projected earnings growth rate of 36.1% for the current year. The Zacks Consensus Estimate for STLD’s current-year earnings has been revised 7.3% upward in the past 60 days.
Steel Dynamics has a trailing four-quarter earnings surprise of roughly 6.2%. STLD has rallied roughly 63% in a year. The company currently carries a Zacks Rank #2 (Buy).
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Nucor (NUE) Sees Lower Q4 Earnings on Weaker Prices and Volumes
Nucor Corporation (NUE - Free Report) has issued a downbeat guidance for the fourth quarter of 2022. The steel giant expects fourth-quarter earnings to be between $4.25 and $4.35 per share. This suggests a decline from $6.50 per share in third-quarter 2022 and $7.97 per share in the year-ago quarter. The company also noted that its full-year 2022 earnings remain on track to exceed the record earnings of $23.16 per share it set last year.
The company sees earnings to decline significantly in the steel mills segment on a sequential comparison basis in the fourth quarter. The expected decline is due to lower average selling prices, margin contraction and lower shipment volumes.
The biggest decline in profitability has been forecast at its sheet mills. The company expects shipments for its bar mills to be lower in the fourth quarter due to seasonal factors with customers lowering inventories as year-end approaches.
Nucor expects its steel products segment to deliver strong earnings in the fourth quarter. However, the segment’s earnings are projected to decline modestly on a sequential comparison basis on reduced selling prices and volumes. The company also noted that economic uncertainties and recession concerns could impact future demand.
Earnings for the raw materials unit are forecast to decline significantly in the fourth quarter compared with the third quarter due to lower profitability of the company’s DRI facilities and reduced selling prices for raw materials. Planned outages impacted the DRI facilities during the fourth quarter.
Nucor bought back roughly 3.1 million shares at an average price of $130.30 per share during the fourth quarter. It has repurchased 20.6 million shares year-to-date at an average price of $134.29 per share. It has returned around $3.3 billion to shareholders through share repurchases and dividend payments year to date.
Shares of Nucor are up 17.8% in the past year against a 0.7% decline of the industry.
Image Source: Zacks Investment Research
Nucor’s third-quarter 2022 earnings were impacted by lower profitability in the steel mills unit. Total steel mills shipments fell 10% year over year in the third quarter. Earnings of the company’s steel mills unit declined on a sequential comparison basis in the quarter, hurt by metal margin contraction and lower shipping volumes, especially at its sheet and plate mills.
The U.S. steel industry has lost momentum since April this year as steel prices have witnessed a significant downward correction after a massive spike in March 2022 following Russia's invasion of Ukraine.
U.S. steel prices have tumbled after surging to roughly $1,500 per short ton in April 2022 due to supply concerns stemming from the Russia-Ukraine war. The benchmark hot-rolled coil ("HRC") prices cratered to near the $600 per short ton level in November 2022. The downward drift partly reflects weaker demand.
Demand in the automotive market weakened due to the semiconductor crunch, hurting automotive production. The Russia-Ukraine war and soaring energy costs have also dwindled demand in Europe. Fears of a recession have also impacted U.S. HRC prices.
Nucor Corporation Price and Consensus
Nucor Corporation price-consensus-chart | Nucor Corporation Quote
Zacks Rank & Key Picks
Nucor currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Olympic Steel, Inc. (ZEUS - Free Report) , Commercial Metals Company (CMC - Free Report) and Steel Dynamics, Inc. (STLD - Free Report) .
Olympic Steel currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 4.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 25.4%, on average. ZEUS has rallied around 38% in a year.
Commercial Metals currently carries a Zacks Rank #1. The consensus estimate for CMC's current-year earnings has been revised 13.8% upward in the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. CMC has gained around 39% in a year.
Steel Dynamics has a projected earnings growth rate of 36.1% for the current year. The Zacks Consensus Estimate for STLD’s current-year earnings has been revised 7.3% upward in the past 60 days.
Steel Dynamics has a trailing four-quarter earnings surprise of roughly 6.2%. STLD has rallied roughly 63% in a year. The company currently carries a Zacks Rank #2 (Buy).