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Nucor Q2 Preview: Double-Digit Earnings Growth in Store?
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The Zacks Steel – Producers Industry has extensively outperformed the S&P 500 year-to-date. However, the industry has struggled over the past three months, losing nearly 30% in value. The chart below compares the performance of the two over several timeframes.
Image Source: Zacks Investment Research
The industry got off to a scorching-hot start in 2022 but has since pulled back extensively. One company residing in the sector, Nucor (NUE - Free Report) , is slated to release quarterly results before the opening bell on Thursday.
Nucor is a leading producer of structural steel, steel bars, steel joists, steel deck, and cold-finished bars in the United States. In addition, the company is a Zacks Rank #5 (Strong Sell).
Let’s take a magnified view of the company to see how it shapes up heading into the quarterly report.
Share Performance & Valuation
Throughout 2022, Nucor shares have been on a rollercoaster but have appreciated nearly 4% in value and have outperformed its Zacks Industry by a sizable margin.
Image Source: Zacks Investment Research
However, the stock has really pulled back over the last three months, declining more than 30% in value.
Image Source: Zacks Investment Research
Although the year-to-date price action has been favorable, the more recent share performance is very disheartening.
The company sports a low 3.8X forward earnings multiple, well below its five-year median of 10.4X and a fraction of 2020 highs of 27.7X.
Image Source: Zacks Investment Research
The steel industry is a cyclical business. What does that mean? A cyclical business is affected by macroeconomic changes within the overall economy. Generally, they follow the expansion, peak, recession, and recovery cycles.
They have their ups and downs, alluding to why they are coined as cyclical. During their strongest periods, when earnings are at their peak, their price-to-earnings ratios are at their lowest.
When earnings are at their lowest, P/E ratios are at their highest.
Quarterly Performance & Share Reactions
Nucor has consistently reported bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate in eight of its previous ten quarters. In addition, Nucor recorded a solid 4.3% bottom-line beat in its latest quarter.
Top-line results have also been strong; Nucor has exceeded quarterly revenue estimates in seven of its previous ten quarterly reports. The chart below illustrates the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
The market reacted poorly to the company’s latest EPS beat – following the report, shares fell more than 8%.
Growth Estimates
Top and bottom-line estimates reflect serious growth. For the upcoming quarter, the $9.01 per share estimate reflects a sizable 80% growth in earnings from the year-ago quarter.
In addition, the Consensus Estimate Trend has soared 43% over the last 60 days, with one analyst revising their earnings outlook downward.
Image Source: Zacks Investment Research
Nucor is forecasted to generate $11.4 billion in revenue for the quarter, notching a double-digit uptick of 30% compared to year-ago sales of $8.8 billion.
Bottom Line
Nucor looks to register double-digit top and bottom-line growth, a reflection of its cyclical business. However, shares have suffered immensely as of late after getting off to a parabolic start in 2022.
In addition, the company carries a Zacks Rank #5 (Strong Sell), indicating that investors will be better off looking elsewhere to park their hard-earned cash.
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Nucor Q2 Preview: Double-Digit Earnings Growth in Store?
The Zacks Steel – Producers Industry has extensively outperformed the S&P 500 year-to-date. However, the industry has struggled over the past three months, losing nearly 30% in value. The chart below compares the performance of the two over several timeframes.
Image Source: Zacks Investment Research
The industry got off to a scorching-hot start in 2022 but has since pulled back extensively. One company residing in the sector, Nucor (NUE - Free Report) , is slated to release quarterly results before the opening bell on Thursday.
Nucor is a leading producer of structural steel, steel bars, steel joists, steel deck, and cold-finished bars in the United States. In addition, the company is a Zacks Rank #5 (Strong Sell).
Let’s take a magnified view of the company to see how it shapes up heading into the quarterly report.
Share Performance & Valuation
Throughout 2022, Nucor shares have been on a rollercoaster but have appreciated nearly 4% in value and have outperformed its Zacks Industry by a sizable margin.
Image Source: Zacks Investment Research
However, the stock has really pulled back over the last three months, declining more than 30% in value.
Image Source: Zacks Investment Research
Although the year-to-date price action has been favorable, the more recent share performance is very disheartening.
The company sports a low 3.8X forward earnings multiple, well below its five-year median of 10.4X and a fraction of 2020 highs of 27.7X.
Image Source: Zacks Investment Research
The steel industry is a cyclical business. What does that mean? A cyclical business is affected by macroeconomic changes within the overall economy. Generally, they follow the expansion, peak, recession, and recovery cycles.
They have their ups and downs, alluding to why they are coined as cyclical. During their strongest periods, when earnings are at their peak, their price-to-earnings ratios are at their lowest.
When earnings are at their lowest, P/E ratios are at their highest.
Quarterly Performance & Share Reactions
Nucor has consistently reported bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate in eight of its previous ten quarters. In addition, Nucor recorded a solid 4.3% bottom-line beat in its latest quarter.
Top-line results have also been strong; Nucor has exceeded quarterly revenue estimates in seven of its previous ten quarterly reports. The chart below illustrates the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
The market reacted poorly to the company’s latest EPS beat – following the report, shares fell more than 8%.
Growth Estimates
Top and bottom-line estimates reflect serious growth. For the upcoming quarter, the $9.01 per share estimate reflects a sizable 80% growth in earnings from the year-ago quarter.
In addition, the Consensus Estimate Trend has soared 43% over the last 60 days, with one analyst revising their earnings outlook downward.
Image Source: Zacks Investment Research
Nucor is forecasted to generate $11.4 billion in revenue for the quarter, notching a double-digit uptick of 30% compared to year-ago sales of $8.8 billion.
Bottom Line
Nucor looks to register double-digit top and bottom-line growth, a reflection of its cyclical business. However, shares have suffered immensely as of late after getting off to a parabolic start in 2022.
In addition, the company carries a Zacks Rank #5 (Strong Sell), indicating that investors will be better off looking elsewhere to park their hard-earned cash.