Earnings Preview: Nucor - Analyst Blog

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Nucor Corporation ( NUE ) is scheduled to report its first-quarter 2012 results before the market opens on Thursday, April 19. The Zacks Consensus Estimate for the quarter is 40 cents per share, representing an estimated year-over-year decrease of 19.54%.

With respect to earnings surprises, the company outdid the Zacks Consensus Estimate in the trailing four quarters. This is reflected in the average earnings surprise of 24.57%, with positive surprises in all four quarters.

Fourth Quarter and Full-Year 2011 Recap

Nucor reported net earnings of $137.1 million, or 43 cents per diluted share (excluding special items) in the fourth quarter of 2011, beating the Zacks Consensus Estimate of 29 cents. This was a significant increase from $11.4 million, or 4 cents per diluted share (excluding special items) reported in the year-ago quarter.

Net earnings for fiscal 2011 were $778.2 million, or $2.45 per diluted share, up nearly six-fold over the net earnings of $134.1 million, or $0.42 per diluted share in fiscal 2010.

Nucor's consolidated net sales increased 25% year over year to $4.83 billion in the fourth quarter. The increase was attributable to a rise of 18% in the average sales price per ton. Total tons shipped to outside customers were 5,683,000 tons in the fourth quarter, up 7% year over year. 

For fiscal 2011, consolidated net sales increased 26% year over year to $20.02 billion due to an increase of 21% in the average sales price per ton. Total tons shipped to outside customers were 23,044,000 tons, up 5% year over year.

Company's Guidance

Nucor expects earnings in the first quarter of 2012 to improve from fourth-quarter 2011 levels. End markets, such as automotive, heavy equipment, energy and general manufacturing, have continued to experience improvements in demand, benefitting special bar quality, sheet and plate products. Nucor also expects to see small but encouraging signs of improvement in its construction products business.

Estimate Revisions Trend

Agreement

Estimates for Nucor for the first quarter elicit limited movements. Over the past 30 days, 1 (out of 13 analysts) has raised his/her estimate for the quarter with none lowering their forecasts. There was a solitary upward movement over the past week. However, for fiscal 2012, 8 analysts (out of 16) decreased their estimates over the past month while 1 moved the opposite direction.

Magnitude

Over the last 30 days, the Zacks Consensus Estimate for the first quarter has increased by a penny to 40 cents per share while remaining static over the last 7 days. For fiscal 2012, the estimate decreased by a couple of cents over the last week and plunged by 16 cents over the past month to $2.74.

Our View

We expect end markets to perform well in the first quarter due to improved markets. Nucor's strong cash flows and balance sheet provide it the flexibility to continue with its growth strategy.

However, construction markets were weak in the last quarter and continue to remain a concern. Further, Nucor faces stiff competition from Commercial Metals Co. ( CMC ) and United States Steel Corp ( X ). Currently, we have a long-term (more than 6 months) Neutral recommendation on Nucor. The stock currently retains a short-term (1 to 3 months) Zacks #3 Rank (Hold).


 
COMMERCIAL METL ( CMC ): Free Stock Analysis Report
 
NUCOR CORP ( NUE ): Free Stock Analysis Report
 

UTD STATES STL ( X ): Free Stock Analysis Report
 
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Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CMC , NUE , X

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