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Nucor (NUE) Acquires Hannibal, Enhances Warehouse Services
Nucor Corporation (NUE - Free Report) recently announced that it has agreed to purchase Hannibal Industries, Inc., a leading national provider of racking solutions to warehouses and serving the e-commerce, industrial, food storage and retail segments.
The transaction is valued at $370 million equating to 6.9x of the EBITDA for the trailing twelve months ended March 2021, for Nucor. The company will be purchasing 100% of Hannibal's outstanding shares from its Employee Stock Ownership Plan (ESOP) once it obtains approvals.
Nucor noted that the buyout will provide it with a growth platform and also broaden its product offerings to the channel of warehouses. It is in sync with the company’s strategy of expanding its reach beyond its core steel business and enables it to steer toward the position of a market leader. Moreover, the acquisition, together with the pending purchase of Cornerstone Building Brands' insulated metal panels business, will bolster its services to warehouses and distribution customers. Nucor also believes that both companies have a similar employee-centric culture and that will be an added benefit for the integrated company.
Shares of Nucor have surged 115.2% over a year, underperforming the industry’s 126.9% growth.
Image Source: Zacks Investment Research
In the recently reported second quarter, the company recorded earnings of $5.04 per share, the highest quarterly earnings in its history, also beating the Zacks Consensus Estimate of $4.81. It raked in net sales of $8,789.2 million, increasing 103% from the year-ago quarter and also surpassing the Zacks Consensus Estimate of $8,311.9 million.
Nucor expects third-quarter earnings to be the highest quarterly earnings in its history, exceeding the record-level earnings in the second quarter. Earnings are expected to be mainly driven by higher pricing and margins in the steel mills segment. The company also sees higher profitability in the steel mills segment with the biggest increase at sheet mills.
Nucor Corporation Price and Consensus
Nucor Corporation price-consensus-chart | Nucor Corporation Quote
Zacks Rank & Other Stocks to Consider
Currently, Nucor carries a Zacks Rank #1 (Strong Buy).
Other similar-ranked stocks in the basic materials space include Aperam S.A. (APEMY - Free Report) , ArcelorMittal (MT - Free Report) and Commercial Metals Company (CMC - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.
Aperam has a projected earnings growth rate of 301.6% for the current year. The company’s shares have grown 104.5% over a year.
ArcelorMittal has a projected earnings growth rate of 1,484.4% for the current year. The company’s shares have shot up 179.1% over a year.
Commercial Metals has a projected earnings growth rate of around 33% for the current year. The company’s shares have risen 49.5% over a year.