) is scheduled to report its second-quarter 2012 results before the
market opens on Thursday, July 19. The Zacks Consensus Estimate for
the quarter is 47 cents per share, representing a year-over-year
decline of roughly 50%.
Nucor has been struggling due to oversupply in the U.S. steel
market and the gloomy European market. Last month, Nucor issued its
earnings guidance for the second quarter and expects earnings of 35
to 40 cents per share. The forecast is way behind Nucor's
second-quarter 2011 earnings of 94 cents and also below its
previous second-quarter expectations.
The company expected a sequential improvement over its first
quarter earnings in the second quarter, but industry pressures and
macroeconomic factors forced it to cut its forecast. The projected
earnings include one-time adjustments such as an impairment charge
of approximately $30 million, or 9 cents per share, and an
estimated last in first out (LIFO) credit of $14.5 million (or 3
cents per share).
Previous Quarter Performance
Nucor's first quarter earnings per share came in at 46 cents,
considerably ahead of the Zacks Consensus Estimate of 40 cents.
Consolidated net sales increased 5% year over year to $5.07 billion
in the quarter. The jump in the top line was driven by a 6%
increase in average sales price per ton.
However, the increase in revenue was not enough to meet the
Zacks Consensus Estimate of $5.085 billion as a 1% decline in total
tons shipped to outside customers weighed on the top line. The
average scrap and scrap substitute cost per ton used in the quarter
was $445, up 5% year over year.
Agreement of Estimate Revisions
Estimates for Nucor have not moved in the past week, with none
of the 13 analysts covering the stock revising their earnings
estimates for fiscal 2012. An identical trend is applicable to the
estimate for the second quarter, with none of the 12 analysts
decreasing or increasing their estimates.
Estimates for 2012 demonstrate a negative bias over the last 30
days with 4 (out of 13) analysts having lowered their forecasts and
only 1 going in the opposite direction. For the second quarter,
none of the analysts have revised their estimates over the last
Magnitude of Estimate Revisions
Estimates for the second quarter and fiscal 2012 haven't moved
at all over the last week. Similarly, the Consensus Estimate for
the second quarter has not moved over the last one month. However,
the estimate for fiscal 2012 has dropped 10 cents in the last
month. The current Zacks Consensus Estimates for the second quarter
and 2012 are 47 cents and $1.86, respectively.
Nucor has trumped the Zacks Consensus Estimate over the last
four quarters, resulting in an average positive surprise of
Nucor is witnessing slight improvements in demand in the
end-markets such as automotive, heavy equipment, energy and general
manufacturing. All three of its construction products businesses,
rebar fabrication, joist and decking, and pre-engineered metal
buildings were in the black in May, in spite of weakness in the
However, a sluggish construction market and financial turmoil in
the Eurozone represents significant headwinds. Moreover, Chinese
steel output has outpaced demand, resulting in an oversupply in the
industry and is pressurizing prices in the process.
Also, an increase in imports in the U.S. markets along with
production ramp-ups by domestic steel producers have led to an
oversupply in the industry, resulting in weak pricing. Hence, even
though steel demand might show some improvement, industry
oversupply has knocked the wind out of seasonal pricing momentum,
which is usually seen in the early part of the year.
We currently have a long-term Neutral recommendation on Nucor.
The company, which competes with
Commercial Metals Co.
United States Steel Corp.
), maintains a Zacks #3 Rank, which translates into a short-term (1
to 3 months) Hold rating.
COMMERCIAL METL (CMC): Free Stock Analysis
NUCOR CORP (NUE): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
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