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Nucor (NUE) Issues Upbeat Guidance for Q2, Shares Spike
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Nucor (NUE - Free Report) sees higher profits in the second quarter of 2016 on improved prices and favorable impact from reduced steel imports.
The steel giant sees earnings for the second quarter to be in the band of 65 cents to 70 cents per share. That is an increase from 39 cents a share it earned a year ago and 22 cents per share recorded in the previous quarter.
Nucor’s second-quarter guidance include an estimated LIFO expense of $19 million or 3 cents per share versus an expense of $27.5 million or 5 cents per share in the first quarter of 2016 and a LIFO credit of $95.5 million or 19 cents per share in the second quarter of 2015.
The news sent the Charlotte-based company’s shares up around 2.3% in the trading session yesterday, closing the day at $50.45.
The company expects improved performance in its Steel Mills division in the second quarter vis-à-vis the first quarter on increased prices and higher volumes. Profitability of its sheet, bar and plate mills is expected to improve sequentially in the quarter. The sheet mills, which is benefiting from lower inventory levels in the supply chain, is expected to see the biggest improvement in profitability. Average sheet product prices also increased significantly in the second quarter. While Nucor is seeing continued momentum in the automotive market, weakness persists across energy, heavy equipment and agricultural markets.
Nucor also expects better performance in its Downstream Products unit in the second quarter compared to the first on improvement in non-residential construction markets. For the Raw Materials segment, the company expects improved profitability in the second quarter on higher pricing in its scrap processing businesses and direct reduced iron (“DRI”) facilities.
Steel market conditions in the U.S. have somewhat improved of late, thanks to favorable rulings (leading to levy of tariffs on imports) on steel trade cases in the recent past that have resulted in a decline in steel imports in the first four months of 2016.
The U.S. Department of Commerce (“DOC”), in May 2016, slapped final anti-dumping duties on imports of corrosion-resistant steel from China, India, Italy, South Korea and Taiwan including a staggering anti-dumping duty rate of 209.97% on imports of these products from China. The regulator also levied a hefty final anti-dumping duty rate of 265.79% on imports of cold-rolled steel from China in May.
According to American Iron and Steel Institute ("AISI"), an association of North American steel makers, total steel imports for the first four months of 2016 dropped 34% from the same period a year ago. The decline reflects the punitive actions (in the form of duties) taken by the U.S. trade regulators to repel the tide of steel imports.
Domestic steel makers including Nucor, U.S. Steel (X - Free Report) , AK Steel and Steel Dynamics (STLD - Free Report) continue to actively press the U.S. regulators to stop unfair trade practices and enforce new trade laws to rescue the crisis-hit U.S. steel industry.
Nucor is a Zacks Rank #3 (Hold).
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Nucor (NUE) Issues Upbeat Guidance for Q2, Shares Spike
Nucor (NUE - Free Report) sees higher profits in the second quarter of 2016 on improved prices and favorable impact from reduced steel imports.
The steel giant sees earnings for the second quarter to be in the band of 65 cents to 70 cents per share. That is an increase from 39 cents a share it earned a year ago and 22 cents per share recorded in the previous quarter.
Nucor’s second-quarter guidance include an estimated LIFO expense of $19 million or 3 cents per share versus an expense of $27.5 million or 5 cents per share in the first quarter of 2016 and a LIFO credit of $95.5 million or 19 cents per share in the second quarter of 2015.
The news sent the Charlotte-based company’s shares up around 2.3% in the trading session yesterday, closing the day at $50.45.
NUCOR CORP Price
NUCOR CORP Price | NUCOR CORP Quote
The company expects improved performance in its Steel Mills division in the second quarter vis-à-vis the first quarter on increased prices and higher volumes. Profitability of its sheet, bar and plate mills is expected to improve sequentially in the quarter. The sheet mills, which is benefiting from lower inventory levels in the supply chain, is expected to see the biggest improvement in profitability. Average sheet product prices also increased significantly in the second quarter. While Nucor is seeing continued momentum in the automotive market, weakness persists across energy, heavy equipment and agricultural markets.
Nucor also expects better performance in its Downstream Products unit in the second quarter compared to the first on improvement in non-residential construction markets. For the Raw Materials segment, the company expects improved profitability in the second quarter on higher pricing in its scrap processing businesses and direct reduced iron (“DRI”) facilities.
Steel market conditions in the U.S. have somewhat improved of late, thanks to favorable rulings (leading to levy of tariffs on imports) on steel trade cases in the recent past that have resulted in a decline in steel imports in the first four months of 2016.
The U.S. Department of Commerce (“DOC”), in May 2016, slapped final anti-dumping duties on imports of corrosion-resistant steel from China, India, Italy, South Korea and Taiwan including a staggering anti-dumping duty rate of 209.97% on imports of these products from China. The regulator also levied a hefty final anti-dumping duty rate of 265.79% on imports of cold-rolled steel from China in May.
According to American Iron and Steel Institute ("AISI"), an association of North American steel makers, total steel imports for the first four months of 2016 dropped 34% from the same period a year ago. The decline reflects the punitive actions (in the form of duties) taken by the U.S. trade regulators to repel the tide of steel imports.
Domestic steel makers including Nucor, U.S. Steel (X - Free Report) , AK Steel and Steel Dynamics (STLD - Free Report) continue to actively press the U.S. regulators to stop unfair trade practices and enforce new trade laws to rescue the crisis-hit U.S. steel industry.
Nucor is a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>