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Nucor (NUE) Issues Downbeat Q2 Earnings View, Shares Slip

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Nucor Corporation (NUE - Free Report) has provided disappointing guidance for second-quarter 2019. The steel giant expects earnings per share in the band of $1.20-$1.25 for the quarter. This reflects a decline from $1.63 in the first quarter of 2019 and $2.13 in the year-ago quarter.

The company’s guidance for the quarter also fell short of expectations. Currently, the Zacks Consensus Estimate for second-quarter earnings is pegged at $1.47.

The results in the year-ago quarter included a benefit of $23.3 million related to insurance recoveries. Moreover, first-quarter 2019 results included a benefit of $33.7 million associated with the gain on the sale of an equity method investment in the company’s raw materials segment.

Nucor’s shares fell roughly 1.8% to close at $50.75 yesterday, reflecting the downbeat view. The company’s shares have lost 22.5% in the past year compared with the industry’s 34.7% decline.


 

Nucor expects performance in the steel mills unit to decline sequentially in the second quarter. The company noted that service center destocking is affecting order rates. Lower scrap prices and higher supply in the domestic market have led to aggressive inventory management by the company’s customers. Nucor is seeing stability in most of its end use markets with some weakness in automotive.

The company envisions profitability in its steel products unit to improve on a sequential comparison basis in the second quarter as better weather and typical seasonal patterns have benefited non-residential construction markets.

Harsh winter conditions delayed shipments to certain construction customers of steel mills and steel products divisions in the first quarter of 2019.

Meanwhile, performance in Nucor’s raw materials unit is forecast to decline sequentially in the second quarter due to margin compression in the DRI businesses.

Nucor Corporation Price and Consensus

 

Nucor Corporation Price and Consensus

Nucor Corporation price-consensus-chart | Nucor Corporation Quote

Zacks Rank & Key Picks

Nucor currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks worth considering in the basic materials space include Materion Corporation (MTRN - Free Report) , Israel Chemicals Ltd. (ICL - Free Report) and Innospec Inc. (IOSP - Free Report) .

Materion has an expected earnings growth rate of 27.3% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have gained around 17% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Israel Chemicals has an expected earnings growth rate of 13.5% for the current fiscal year and carries a Zacks Rank #2 (Buy). Its shares have gained around 9% in the past year.

Innospec has an expected earnings growth rate of 6.6% for the current year and carries a Zacks Rank #2. Its shares are up roughly 7% in the past year.

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