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Nucor (NUE - Free Report) saw higher profits in third-quarter 2016, aided by improved steel prices. The steel giant recorded a profit of $270 million, or 84 cents per share in the quarter, a roughly 18.9% rise from a profit of $227.1 million or 71 cents per share recorded a year ago.
Earnings for the reported quarter include charges related to legal settlements of 6 cents per share and a net benefit of 2 cents per share. Excluding these items, adjusted earnings came in at 88 cents per share that missed the Zacks Consensus Estimate of 90 cents.
Revenues rose around 1.5% year over year to $4,290.2 million in the reported quarter. Sales missed the Zacks Consensus Estimate of $4,539 million.
Total steel mills shipments in the third quarter were 5,213,000 tons, up 1% year over year. Total tons shipped to outside customers were flat year over year at 5,889,000 tons. Average sales price in the quarter increased 2% year over year.
Steel mill operating rates rose to 71% in the reported quarter from 69% a year ago.
Segment Highlights
Nucor saw improved performance in its Steel Mills segment in the third quarter compared to the previous quarter. The profitability of its sheet mills improved due to increased average selling prices. Although demand for cold-rolled and galvanized sheet products has been strong, market conditions for the company’s plate and bar mills remained challenging due to high levels of imports. Energy, heavy equipment and agricultural markets were weak while the automotive markets remained strong.
The performance of Nucor’s raw materials segment in the third quarter of 2016 improved considerably from the sequentially prior quarter due to the improved performance of its direct reduced iron (“DRI”) facilities. However, the company saw decreased profitability for its steel products segment in the third quarter due to margin compression resulting from higher steel prices. It continues to see gradual improvement in non-residential construction markets.
Financial Position
Nucor ended the quarter with a strong liquidity position with cash and cash equivalents climbing around 10.1% year over year to $1,704.7 million. Long-term debt was $4,338.3 million, down around 0.5% year over year.
Guidance
Moving ahead, Nucor expects earnings in the fourth quarter to decrease on a sequential comparison basis mainly due to lower margins in the steel mills segment, with the most significant impact expected on the sheet mills.
The company expects the raw materials segment to return to a loss due to reduced transfer prices at the DRI facilities in the fourth quarter. The performance of the steel products segment has been forecast to decline due to year-end seasonality.
ArcelorMittal has an expected earnings growth of around 350% for the current year and has a Zacks Rank #2.
POSCO has an expected earnings growth of around 852.4% for the current year and carries a Zacks Rank #2.
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Nucor (NUE) Misses Q3 Earnings, Revenue Estimates
Nucor (NUE - Free Report) saw higher profits in third-quarter 2016, aided by improved steel prices. The steel giant recorded a profit of $270 million, or 84 cents per share in the quarter, a roughly 18.9% rise from a profit of $227.1 million or 71 cents per share recorded a year ago.
Earnings for the reported quarter include charges related to legal settlements of 6 cents per share and a net benefit of 2 cents per share. Excluding these items, adjusted earnings came in at 88 cents per share that missed the Zacks Consensus Estimate of 90 cents.
Revenues rose around 1.5% year over year to $4,290.2 million in the reported quarter. Sales missed the Zacks Consensus Estimate of $4,539 million.
Operating Stats
Total steel mills shipments in the third quarter were 5,213,000 tons, up 1% year over year. Total tons shipped to outside customers were flat year over year at 5,889,000 tons. Average sales price in the quarter increased 2% year over year.
Steel mill operating rates rose to 71% in the reported quarter from 69% a year ago.
Segment Highlights
Nucor saw improved performance in its Steel Mills segment in the third quarter compared to the previous quarter. The profitability of its sheet mills improved due to increased average selling prices. Although demand for cold-rolled and galvanized sheet products has been strong, market conditions for the company’s plate and bar mills remained challenging due to high levels of imports. Energy, heavy equipment and agricultural markets were weak while the automotive markets remained strong.
The performance of Nucor’s raw materials segment in the third quarter of 2016 improved considerably from the sequentially prior quarter due to the improved performance of its direct reduced iron (“DRI”) facilities. However, the company saw decreased profitability for its steel products segment in the third quarter due to margin compression resulting from higher steel prices. It continues to see gradual improvement in non-residential construction markets.
Financial Position
Nucor ended the quarter with a strong liquidity position with cash and cash equivalents climbing around 10.1% year over year to $1,704.7 million. Long-term debt was $4,338.3 million, down around 0.5% year over year.
Guidance
Moving ahead, Nucor expects earnings in the fourth quarter to decrease on a sequential comparison basis mainly due to lower margins in the steel mills segment, with the most significant impact expected on the sheet mills.
The company expects the raw materials segment to return to a loss due to reduced transfer prices at the DRI facilities in the fourth quarter. The performance of the steel products segment has been forecast to decline due to year-end seasonality.
NUCOR CORP Price, Consensus and EPS Surprise
NUCOR CORP Price, Consensus and EPS Surprise | NUCOR CORP Quote
Zacks Rank
Nucor currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the steel space include AK Steel Holding Corp. , ArcelorMittal (MT - Free Report) and POSCO (PKX - Free Report) .
AK Steel has an expected earnings growth of around 194.1% for the current year. The company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
ArcelorMittal has an expected earnings growth of around 350% for the current year and has a Zacks Rank #2.
POSCO has an expected earnings growth of around 852.4% for the current year and carries a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>