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Why Is Nucor (NUE) Up 8.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Nucor (NUE - Free Report) . Shares have added about 8.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Nucor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Nucor's Q3 Earnings Miss, Revenues Surpass Estimates

Nucor reported higher profits in third-quarter 2018. The company logged net earnings of $676.7 million or $2.13 per share, up nearly three-fold from $254.9 million or 79 cents registered a year ago.

Barring one-time items, earnings per share came in at $2.33, which missed the Zacks Consensus Estimate of $2.35.

Nucor’s net sales totaled $6,742.2 million, up roughly 30.4% year over year from $5,170.1 million. The reported figure outpaced the Zacks Consensus Estimate of $6,518.5 million.

Operating Stats

Total steel mills shipments in the quarter were 6,293,000 tons, up 7% year over year. Total tons shipped to outside customers were up 6% year over year to 7,048,000 tons. Average sales price improved 23% year over year.

Steel mill operating rates increased to 92% in the third quarter from 84% a year ago.

Segment Highlights

Performance in the steel mills segment improved sequentially. This was mainly owing to higher earnings at plate mills and sheet mills despite the impact of both weather-related and planned outages at certain mills in the third quarter.

Performance of steel products and raw materials unit decreased sequentially. Per the company, the decline in the raw materials unit can be attributed to the earlier mentioned impairment charges related to the company’s natural gas well assets along with dismal performance of scrap brokerage and processing operations. Moreover, the decreased performance of Nucor’s DRI facilities also dented the performance as the company’s Louisiana DRI facility experienced unplanned and planned outages in the quarter.

Financial Position

As of Sep 29, 2018, Nucor had cash and cash equivalents of around $1.9 billion compared with $1.6 billion a year ago. Long-term debt was $4,232.8 million, up roughly 30.6% year over year.

Outlook

Nucor expects fourth-quarter earnings to decrease across all three operating segments compared with the third quarter, barring the impairment charge. Per the company, the expected decline in performance in the fourth quarter is due to typical seasonality factors.

However, the company anticipates the fourth quarter to demonstrate strong performance as it believes earnings will be noticeably higher year over year. Moreover, it continues to believe there is sustainable strength in steel end use markets.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Nucor has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nucor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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