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Nucor (NUE) to Add Coil Paint Line at Arkansas Sheet Mill

Zacks Equity Research

Nucor Corporation’s NUE board has approved an expansion project that will add a coil paint line at its sheet mill in Mississippi County, AR. Notably, the new coil paint line is expected to start operation in the first half of 2022, with a capacity of 250,000 tons per year.

Per management, the new coil paint line is anticipated to diversify Nucor’s product and market mix by adding additional processing capability. It is also expected to expand the company’s value-added product offerings. Further, the project will likely improve the quality of service that Nucor offers to its pre-paint customers.

Through the capital investment, the company will be able to compete in new markets such as roofing and siding, light fixtures, and appliances. Also, it will likely strengthen Nucor’s existing market position in HVAC, garage doors and service centers.

The capital investment is expected to allow the steel mill in Arkansas to build a high-quality continuous coil coating line, with widths of 35-72 inches and thickness of 0.010-0.065 inches.

Notably, Nucor Steel Arkansas was opened in 1992. It produces around 2,600,000 tons of hot-rolled sheet steel for appliance, automotive, construction, pipe and tube, and many other applications. Recently, it completed the construction of a specialty cold mill complex. Currently, it is constructing a galvanizing line, which is expected to start operation in 2021.

Shares of Nucor have gained 6.4% in the past year against the industry’s 2.4% decline.

 

 

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

The company expects the steel mills unit’s performance to sequentially decline in the fourth quarter due to lower steel prices.

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

The company expects the raw materials unit’s losses to sequentially widen in the fourth quarter on the planned outage at the Louisiana DRI facility and further margin compression.

Nucor Corporation Price and Consensus

 

Nucor Corporation Price and Consensus

Nucor Corporation price-consensus-chart | Nucor Corporation Quote

Zacks Rank & Other Stocks to Consider

Nucor currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Impala Platinum Holdings Ltd. IMPUY, currently sporting a Zacks Rank #1 (Strong Buy), and Franco-Nevada Corporation FNV and General Moly, Inc GMO, carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Impala Platinum has a projected earnings growth rate of 255.2% for 2019. The company’s shares have rallied 323.4% in a year.

Franco-Nevada has a projected earnings growth rate of 45.3% for 2019. The company’s shares have rallied 40.8% in a year.

General Moly has an estimated earnings growth rate of 12.5% for the current year. Its shares have moved up 17.8% in the past year.

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