Nucor (NUE) Sees Lower Q3 Earnings on Weaker Steel Mills Profit
Nucor Corporation NUE has issued a downbeat guidance for the third quarter of 2022. The steel giant projects third-quarter earnings to be between $6.30 and $6.40 per share. This suggests a decline from $9.67 per share in second-quarter 2022 and $7.28 per share in the year-ago quarter.
The company expects earnings to decline significantly in the steel mills segment on a sequential comparison basis in the third quarter. The expected decline is due to metal margin contraction and lower shipment volumes, especially at its sheet and plate mills.
Nucor expects its steel products segment to deliver another strong quarter, with earnings roughly in-line with second-quarter 2022. Earnings for the raw materials unit are forecast to be flat on a sequential comparison basis in the third quarter. The company continues to believe that 2022 will be the most profitable year in its history.
Nucor bought back 5.3 million shares at an average price of $122.24 per share during the third quarter. It has repurchased 17.5 million shares year-to-date at an average price of $134.99 per share. It has returned more than $2.7 billion to shareholders through share repurchases and dividend payments year to date.
Shares of Nucor are up 9.9% in the past year against a 20.3% decline of the industry.
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Nucor’s second-quarter 2022 earnings per share marked a new quarterly record. The results were driven by higher sales prices notwithstanding a decline in total steel mills shipments. Its average sales price climbed 44% year over year and also rose 3% sequentially in the second quarter. Nucor noted that its steel products unit benefited from strong demand in non-residential construction markets in the quarter.
U.S. steel prices have witnessed a significant downward correction after surging to roughly $1,500 per short ton in April 2022 due to supply concerns stemming from the Russia-Ukraine war. The benchmark hot-rolled coil ("HRC") prices declined more than 45% since their April peak, falling below the $800 per short ton level. The downward drift partly reflects weaker demand. Fears of a recession have also impacted U.S. HRC prices.
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).
Better-ranked stocks worth considering in the basic materials space include Albemarle Corporation ALB, Daqo New Energy Corp. DQ and Sociedad Quimica y Minera de Chile S.A. SQM.
Albemarle, sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 425.3% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 63.7% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 61% in a year.
Daqo New Energy, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 177.5% for the current year. The consensus estimate for DQ's earnings for the current year has been revised 9.8% upward in the past 60 days.
Daqo New Energy’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 10.8%. DQ has gained around 4% over a year.
Sociedad has a projected earnings growth rate of 530.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 18.8% upward in the past 60 days.
Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 102% in a year. The company carries a Zacks Rank #2 (Buy).
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