Nucor Corporation's (NUE - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Nucor has outperformed the industry it belongs to over the past three months. The company’s shares have moved up around 4% over this period, compared with roughly 4% decline recorded by the industry.
Let’s delve deeper into the factors that make this steel giant an attractive investment option.
What’s Working in Favor of NUE?
Solid Rank & VGM Score: Nucor currently sports a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Strong Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for Nucor is currently pegged at $6.79, reflecting an expected year-over-year growth of 93.5%. Moreover, earnings are expected to register a 91% growth in second-quarter 2018. The company also has an expected long-term earnings per share growth of 12%, higher than the industry average of 8.3%.
Positive Earnings Surprise History: Nucor has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 3.8%.
Estimates Northbound: Annual estimates for Nucor have moved north over the past three months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 14.1% to $6.79 per share. The Zacks Consensus Estimate for 2019 has also moved up 4.6% over the same timeframe to $5.87.
Upbeat Outlook: Nucor, last month, provided strong earnings guidance for second-quarter 2018. The company expects earnings for the quarter in the band of $2.05 to $2.10 per share. That is a significant increase from $1.10 per share recorded in the previous quarter and $1.00 per share it earned a year ago.
Nucor noted that the expected increase in second-quarter performance on a sequential comparison basis is 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 sees sequentially higher profitability across its steel products and raw materials segments in the second quarter.
The company noted that its improved earnings reflect stronger market conditions, which it believes have been favorably impacted by tax reform, deregulation and higher, stable oil prices.
Nucor also believes that there is sustainable strength in steel end-use markets based on the current steel market fundamentals and communications with its customers. The company also said that its steel mill and steel product backlogs have trended upward since the start of 2018 and remain strong. It expects strong performance and profitability to continue through the balance of the year.
Nucor has been focusing on growth through strategic acquisitions and is well positioned to gain from such efforts to expand its business. The company also remains committed to expand its production capabilities.
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include KMG Chemicals, Inc. (KMG - Free Report) , Methanex Corporation (MEOH - Free Report) and BHP Billiton Limited (BHP - Free Report) , each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
KMG Chemicals has an expected long-term earnings growth rate of 29%. The company’s shares have rallied around 48% in a year.
Methanex has an expected long-term earnings growth rate of 15%. Its shares have shot up roughly 68% over a year.
BHP Billiton has an expected long-term earnings growth rate of 5.3%. Its shares have gained roughly 27% over a year.
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