Nucor Corporation NUE said that its board has approved a steel bar micromill project. The steel maker is considering five states in the Midwest and Southeast for the project that include Nebraska, Kansas, Missouri, South Carolina and Florida.
In addition, the company’s board has cleared the expansion of either its Illinois or Ohio merchant bar operations.
The company noted that both projects are part of its strategy for long-term profitable growth. These projects are expected to help Nucor retain its position as a low-cost producer and enable it to better serve its customers. The bar mills are expected to deliver considerable value in the future, the company noted.
Nucor’s shares have declined 3.3% over the past three months, underperforming the gain of 18.3% for the industry it belongs to.
Nucor recently provided downbeat guidance for third-quarter 2017. The company sees earnings for the quarter in the band of 75-80 cents per share. That is a decrease from $1.00 per share recorded in the previous quarter and 95 cents a share it earned a year ago.
The projected earnings for the third quarter are also lower than the qualitative guidance provided by the company in its second-quarter 2017 earnings call in July. Earlier, the company had expected earnings in the third quarter to be in a band similar to the quarterly results of first-half 2017.
Nucor noted that the U.S. steel industry continues to be hurt by steel imports. The finished steel imports for the first eight months accounted for about 28% share of the American market and increased an estimated 16.5% from the year-ago period.
Nevertheless, the industry continues to combat unfair traded imports. Since the beginning of the year, the United States Department of Commerce imposed duties on additional steel products which are favorable for the domestic steel industry.
Nucor currently carries a Zacks Rank #3 (Hold).
Nucor Corporation Price and Consensus
Nucor Corporation Price and Consensus | Nucor Corporation Quote
Stocks to Consider
Better-ranked stocks in the basic materials space include Kraton Corporation KRA, Kronos Worldwide, Inc. KRO and Orion Engineered Carbons, S.A. OEC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kraton has expected earnings growth of 7.2% for the current year.
Kronos has expected long-term earnings growth of 5%.
Orion Engineered Carbons has expected earnings growth of 19% for the current year.
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