Nucor's (NUE) Earnings and Sales Surpass Estimates in Q2
Nucor Corporation’s NUE profits declined year over year in second-quarter 2020. The steel giant logged net earnings of $108.9 million or 36 cents per share, down from $386.5 million or $1.26 in the year-ago quarter. Earnings per share in the reported quarter topped the Zacks Consensus Estimate of 14 cents.
Nucor recorded net sales of $4,327.3 million, down 26.6% year over year. Nevertheless, the figure beat the Zacks Consensus Estimate of $4,118.9 million.
Nucor Corporation Price, Consensus and EPS Surprise
Nucor Corporation price-consensus-eps-surprise-chart | Nucor Corporation Quote
Operating Figures
Total steel mills shipments in the second quarter were 4,769,000 tons, down 18% year over year. Total tons shipped to outside customers were down 19% year over year to 5,479,000 tons. Average sales price declined 10% year over year.
Steel mill operating rates were 68% in the second quarter compared with 84% in the prior-year quarter.
Segment Highlights
The company stated that despite challenging overall market conditions due to the coronavirus pandemic, demand in nonresidential construction markets was resilient in the second quarter.
Profitability of steel products unit declined sequentially in the second quarter.
Performance of steel mills unit also declined sequentially in the second quarter due to the impact of the pandemic. Notably, plate and sheet mills were affected due to weak oil and gas market activity and customer production disruptions.
Profitability in the raw materials unit improved marginally in the second quarter compared with first-quarter levels.
Financial Position
At the end of the second quarter, cash and cash equivalents surged 94.8% year over year to around $2.8 billion. Long-term debt was $5,279.1 million, up 24.7% year over year.
For the first six months, net cash generated from operating activities rose 13.6% year over year to around $1.3 billion.
Outlook
Nucor expects third-quarter earnings to be similar to the second quarter levels. The company expects performance of downstream products unit to remain strong in the third quarter due to the continued resiliency of non-residential construction markets.
In the third quarter, performance in the steel mills unit is expected to be similar to the second quarter. While Nucor’s bar and structural mills benefit from non-residential construction market, sheet and plate mills remain challenged. Also, the company expects average selling prices to stay depressed.
Raw materials unit’s performance is projected to decline sequentially in the third quarter due to lower pricing.
Price Performance
Shares of Nucor have lost 25.3% in the past year compared with the industry’s 27.2% decline.
Zacks Rank & Key Picks
Nucor currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, Harmony Gold Mining Company Limited HMY and Northern Dynasty Minerals Ltd. NAK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Equinox Gold has an expected earnings growth rate of 65.5% for 2020. The company’s shares have surged 96.8% in the past year.
Harmony Gold has an expected earnings growth rate of 264.3% for fiscal 2020. Its shares have returned 154.4% in the past year.
Northern Dynasty has an expected earnings growth rate of 28.6% for 2020. The company’s shares have skyrocketed 285.5% in the past year.
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