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Nucor (NUE) Warms Up to Q4 Earnings: What's in the Offing?

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Nucor Corporation (NUE - Free Report) is set to release fourth-quarter 2021 results ahead of the bell on Jan 27. The company is likely to have benefited in the fourth quarter from strong end-market demand and higher year-over-year domestic steel prices.

The U.S. steel giant surpassed the Zacks Consensus Estimate in two of the trailing four quarters while missed twice. It has a trailing four-quarter earnings surprise of 2.74%, on average. It posted a negative earnings surprise of around 2.4% in the last reported quarter.
 
Nucor’s shares are up 70.7% over a year, compared with the industry’s 26.6% rise.

 

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Let’s see how things are shaping up for this announcement.

 

What do the Estimates Say?

Nucor, last month, issued its earnings guidance for the fourth quarter. It expects fourth-quarter earnings in the band of $7.65-$7.75 per share.

The Zacks Consensus Estimate for fourth-quarter consolidated revenues for Nucor is currently pegged at $10,454 million, reflecting a year-over-year increase of 98.8%.

The consensus estimate for total steel mills shipments for the quarter currently stands at 6,091,000 tons, indicating a year-over-year rise of 5.1%. The Zacks Consensus Estimate for total tons shipped to outside customers is pegged at 6,915,000 tons, reflecting a rise of 6.6% on a year-over-year basis.

The Zacks Consensus Estimate for fourth-quarter average sales price per ton for the company’s steel mills unit stands at $1,467, suggesting a 112% year-over-year increase. The consensus estimate for average sales price per ton for its steel products unit is pegged at $2,390, suggesting a year-over-year rise of 69.3%.

A Few Factors to Watch

The company’s fourth-quarter results are likely to reflect strong end-market demand, especially in the non-residential construction market. Strong customer demand has led to a rebound in the automotive market. The company is also seeing strength in heavy and agriculture equipment and improved conditions in the energy markets. Higher demand is likely to have aided its fourth-quarter shipments.

Nucor, in December, said that it expects to log record quarterly earnings in the fourth quarter, driven by strong demand across most of its end-markets. Nucor envisions earnings in the steel mills segment to remain strong in the fourth quarter, despite lower volumes due to year-end seasonality.

Strong demand in non-residential construction is expected to have driven profitability in the company’s steel products segment. However, the raw material segment is likely have faced headwinds from margin compression in its direct-reduced iron facilities.

Higher prices are also expected to have supported Nucor’s fourth-quarter performance. U.S. steel prices witnessed a significant rally in 2021, thanks to strong underlying supply and demand fundamentals. However, prices have come under pressure since the beginning of the fourth quarter of 2021, partly due to rising production levels.

The benchmark hot-rolled coil (“HRC”) prices have lost steam since October after peaking in September 2021, weighed down by shorter lead times and rising supply. Despite the sharp correction from its peak levels, HRC prices remain elevated, and are well above the year-ago levels. Higher domestic steel prices are likely to have boosted Nucor’s selling prices and aided its revenues and margins in the to-be-reported quarter.

 

Nucor Corporation Price and EPS Surprise

Nucor Corporation Price and EPS Surprise

Nucor Corporation price-eps-surprise | Nucor Corporation Quote

Zacks Model

Our proven model does not conclusively predict an earnings beat for Nucor this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Nucor is 0.00%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at $7.82. 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 #1.

Stocks That Warrant a Look

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

Olin Corporation (OLN - Free Report) , scheduled to release earnings on Jan 27, has an Earnings ESP of +1.95% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Olin's fourth-quarter earnings has been revised 4.1% upward over the past 60 days. The consensus estimate for OLN’s earnings for the quarter is currently pegged at $2.53.

CF Industries Holdings, Inc. (CF - Free Report) , expected to release earnings on Feb 16, has an Earnings ESP of +9.44% and carries a Zacks Rank #2.

The consensus estimate for CF Industries' fourth-quarter earnings has been revised 40.1% upward over the past 60 days. The Zacks Consensus Estimate for CF’s earnings for the quarter stands at $3.25.

Celanese Corporation (CE - Free Report) , scheduled to release earnings on Jan 27, has an Earnings ESP of +2.98% and carries a Zacks Rank #3.

The Zacks Consensus Estimate for Celanese's fourth-quarter earnings has been revised 0.6% upward over the past 60 days. The consensus estimate for CE’s earnings for the quarter is currently pegged at $5.05.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.