Nucor (NUE) Boosts Data Center Capability With SWDP Acquisition

Nucor Corporation NUE announced its acquisition of Southwest Data Products, Inc. (SWDP), a manufacturer and installer of data center infrastructure, for $115 million. With its offices and manufacturing facility located in San Bernardino, CA, SWDP employs approximately 147 individuals. Nucor unveiled Nucor Data Systems, a new business unit aimed at enhancing customer service within the data center infrastructure sector.

This strategic acquisition empowers Nucor with new capabilities to tap into the swiftly growing market, establishing Nucor as the preferred supplier for numerous leading hyperscale cloud and colocation data center operators across the nation. The company highlighted that this move resonates with its overarching strategy of branching out into steel-centric ventures that transcend the conventional ebbs and flows of steel production cycles.

The integration of SWDP and Nucor Data Systems will empower Nucor's Warehouse Systems division with enhanced offerings in airflow containment structures and new products, such as manufacturing cabinets/enclosures and data center caging, along with installation services. Leveraging SWDP's synergy with Nucor Warehouse Systems' existing manufacturing capabilities is anticipated to unlock substantial growth opportunities. The proximity of SWDP's location to Nucor Warehouse Systems' production facility in southern California is expected to facilitate seamless integration and accelerate growth initiatives.

Nucor Corporation Price and Consensus


Nucor Corporation Price and Consensus

Nucor Corporation price-consensus-chart | Nucor Corporation Quote


This acquisition presents several synergies with Nucor's core steelmaking business. SWDP utilizes various types of steel as raw materials, including sheet steel, steel tubing, and wire mesh — all of which can be supplied by Nucor facilities. By sourcing steel from Nucor mills, which operate on a circular, recycling-based production process, Nucor aims to ensure that the nation's green and digital economy is constructed with low embodied carbon steel.

Recognized for its commitment to delivering high-quality products, swift lead times, and top-notch installation services, SWDP boasts an impressive clientele comprising leading companies with data center requirements. The demand surge for data centers is being driven by the expanding utilization of artificial intelligence, cloud-based services and video streaming across a myriad of applications.

Nucor’s shares have moved up 29.5% in a year compared with the industry’s 16.4% rise.

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Zacks Rank & Key Picks

Nucor currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS and Ecolab Inc. ECL, each sporting a Zacks Rank #1 (Strong Buy), and Innospec Inc. IOSP,carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for CRS’ current fiscal year earnings is pegged at $4 per share, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 12.2%. The company’s shares have increased 61.3% in the past year.

Ecolab has a projected earnings growth rate of 22.65% for the current year. The Zacks Consensus Estimate for ECL’s current-year earnings has been revised upward by 5.4% in the past 60 days. ECL topped the consensus estimate in each of the last four quarters, with the average earnings surprise being 1.7%. The company’s shares have rallied 36.7% in the past year.

The consensus estimate for IOSP’s current fiscal year earnings is pegged at $6.72 per share, indicating a 10.3% year-over-year rise. IOSP beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 10.5%. The company’s shares have surged 22.6% in the past year.

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

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