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Will Steel Mills Unit Help Nucor (NUE) Beat Earnings in Q2?

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Nucor Corporation (NUE - Free Report) is set to release second-quarter 2018 results before the opening bell on Jul 19.

In the last reported quarter, the steel giant delivered a positive earnings surprise of 6.4% by posting adjusted earnings of $1.17 per share, which surpassed the Zacks Consensus Estimate of $1.10.

Revenues went up roughly 15.6% year over year to $5,568.4 million, beating the Zacks Consensus Estimate of $5,541.6 million.

Notably, Nucor beat the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average positive surprise of 3.8%.

Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.

Nucor Corporation Price and EPS Surprise

Nucor Corporation Price and EPS Surprise | Nucor Corporation Quote

Factors at Play

In June, Nucor provided guidance for second-quarter 2018. The company expects earnings for the quarter in the band of $2.05-$2.10 per share. This reflects a significant increase from $1.10 per share in the first quarter and $1.00 it earned a year ago.

Nucor’s total sales for the second quarter are projected to sequentially increase by roughly 12.7% from the first quarter as the Zacks Consensus Estimate for sales for the second quarter is currently pegged at $6,276 million.

The company expects better second-quarter performance on a sequential comparison basis due to a significant improvement in performance of the steel mills segment on the back of higher average selling prices and higher profitability across all steel mill product groups, especially sheet mills. The company also projects sequentially higher profitability across steel products and raw materials segments in the second quarter.

According to the company, improved earnings reflect stronger market conditions, which have been favorably impacted by higher, stable oil prices and deregulation, tax reform. It also believes that there is sustainable strength in steel end-use markets based on the current steel market fundamentals and communications with its customers.

Shares of Nucor have lost 0.2% in the past three months compared with the industry’s 7.1% decline.

 



Earnings Whispers

Our proven model does not conclusively show that Nucor is likely to beat the estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:

Zacks ESP: Earnings ESP for Nucor for the second quarter is -1.23%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are currently pegged at $2.09 and $2.12, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Nucor currently carries a Zacks Rank #2, which when combined with a negative ESP, makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Allegheny Technologies Incorporated (ATI - Free Report) has an Earnings ESP of +1.94% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eastman Chemical Company (EMN - Free Report) has an Earnings ESP of +2.27% and holds a Zacks Rank #2.  

Ingevity Corporation (NGVT - Free Report) has an Earnings ESP of +9.14% and carries a Zacks Rank #2.

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