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Results: Nucor Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

Simply Wall St
·4 min read

Nucor Corporation (NYSE:NUE) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 7.3% to hit US$4.9b. Nucor reported statutory earnings per share (EPS) US$0.63, which was a notable 19% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Nucor

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earnings-and-revenue-growth

Following the latest results, Nucor's eight analysts are now forecasting revenues of US$20.5b in 2021. This would be a satisfactory 2.6% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 110% to US$2.94. In the lead-up to this report, the analysts had been modelling revenues of US$20.8b and earnings per share (EPS) of US$2.77 in 2021. So the consensus seems to have become somewhat more optimistic on Nucor's earnings potential following these results.

There's been no major changes to the consensus price target of US$47.90, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Nucor, with the most bullish analyst valuing it at US$54.00 and the most bearish at US$39.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Nucor's revenue growth is expected to slow, with forecast 2.6% increase next year well below the historical 8.1%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Nucor is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Nucor following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Nucor analysts - going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 5 warning signs for Nucor that you should be aware of.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.