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Nucor Issues Q4 Guidance, Steel Mills to be Hurt by Low Prices

Zacks Equity Research

Nucor Corporation NUE has recently issued guidance for fourth-quarter 2019.

The steel giant expects earnings per share (EPS) in the range of 25-30 cents for the fourth quarter of 2019. This reflects a sequential decline from EPS of 90 cents in the third quarter and a fall from $2.07 recorded in the year-ago quarter.

The company expects performance of the steel mills unit to sequentially decline in the fourth quarter of 2019 due to lower steel prices. Nucor stated that the domestic scrap metal prices have increased considerably during the fourth quarter and its plate, sheet, bar and structural mills have implemented price hikes. The company believes that this reflects healthy underlying demand for steel mill products. Heading into 2020, Nucor expects steel mills performance to improve. This is likely to be reflected by the effect of price hikes and normal seasonality.

The steel products unit’s profitability is expected to decline sequentially in the fourth quarter due to normal seasonality. However, the company expects profitability of the steel products unit to be significantly higher on a year-over-year basis.  

The company sees raw materials unit’s losses to sequentially widen in the fourth quarter, stemming from the planned outage at its Louisiana DRI facility and further margin compression throughout the raw materials business. 

Nucor’s shares have gained 3% in the past year against the industry’s 4.9% decline.



Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd KL, Impala Platinum Holdings Ltd IMPUY and Polymetal International plc AUCOY, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland Lake Gold has an expected earnings growth rate of 100% for 2019. The company’s shares have surged 76.6% in the past year.

Impala Platinum Holdings has projected earnings growth rate of 255.2% for fiscal 2020. The company’s shares have skyrocketed 292.6% in a year.

Polymetal International has an estimated earnings growth rate of 40.5% for the current year. Its shares have returned 44.5% in the past year.

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