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Nucor (NUE) to Report Q3 Earnings: What's in the Offing?

Nucor Corporation NUE is set to release third-quarter 2020 results ahead of the bell on Oct 22. The company’s results are likely to reflect strength in non-residential construction markets. However, weaker year-over-year steel prices are likely to have weighed on its performance.

The U.S. steel giant delivered an earnings surprise of 55.9%, on average, over the trailing four quarters. It posted an earnings surprise of 157.1% in the last reported quarter.

Nucor’s shares are down 13% year to date, compared with the industry’s 12.3% decline.

 


 

 

Let’s see how things are shaping up for this announcement.

What do the Estimates Say?

Nucor, last month, issued earnings guidance for the third quarter. It expects earnings per share between 50 cents and 55 cents for the quarter. This reflects a rise from 36 cents in the second quarter of 2020 and a decline from 90 cents recorded in the year-ago quarter.

The Zacks Consensus Estimate for third-quarter consolidated revenues for Nucor is currently pegged at $4,455 million, reflecting a year-over-year decline of 18.5%.

Moreover, the Zacks Consensus Estimate for total steel mills shipments for the quarter currently stands at 5,200,000 tons, indicating a decline of 10.2% year over year. The consensus estimate for total tons shipped to outside customers is currently pegged at 5,951,000 tons, reflecting a decrease of 9.2% on a year-over-year basis.

The Zacks Consensus Estimate for average sales price per ton for the company’s steel mills unit stands at $644, suggesting a 9.4% year-over-year decline. The same for the steel products unit is pegged at $1,328, indicating a year-over-year decline of 7.9%.

A Few Factors to Watch

The company’s downstream products segment is likely to have gained from non-residential construction markets in the quarter to be reported. Nucor, last month, said that the segment witnessed a strong third quarter driven by the resiliency of non-residential construction.

Moreover, the company’s bar and structural mills also gained from non-residential construction markets. Utilization rates for its sheet mills also improved throughout the third quarter.

Nucor also witnessed a rise in demand and pricing for raw materials as well as sheet steel in the later part of the third quarter. However, lower pricing for DRI (direct reduced iron) is expected to have hurt the company’s raw materials unit.

Meanwhile, lower year-over-year domestic steel prices are likely to have exerted downward pressure on Nucor’s selling prices and hurt its revenues and margins in the to-be-reported quarter.

The coronavirus outbreak led to a downswing in U.S. steel prices due to a downturn in demand across major end-use markets like automotive and construction. Weak end-market demand put significant pressure on steel prices in July and August. However, prices started to recover in September on U.S. steel mills’ back-to-back price hike actions, tight supply and a revival in end-market demand, especially in automotive. Despite the rebound, prices remain well below the year-ago level.

Nucor Corporation Price and EPS Surprise

 

Nucor Corporation Price and EPS Surprise

Nucor Corporation price-eps-surprise | Nucor Corporation Quote

 

Zacks Model

Our proven model does not conclusively predict an earnings beat for Nucor this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Nucor is 0.00%. The Zacks Consensus Estimate for earnings for the third quarter is currently pegged at 53 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Nucor currently carries a Zacks Rank #3.

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Agnico Eagle Mines Limited AEM, scheduled to release earnings on Oct 28, has an Earnings ESP of +14.25% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newmont Corporation NEM, scheduled to release earnings on Oct 29, has an Earnings ESP of +0.97% and carries a Zacks Rank #1.

Eastman Chemical Company EMN, scheduled to release earnings on Oct 29, has an Earnings ESP of +1.97% and carries a Zacks Rank #2.

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Nucor Corporation (NUE): Free Stock Analysis Report
 
Newmont Corporation (NEM): Free Stock Analysis Report
 
Eastman Chemical Company (EMN): Free Stock Analysis Report
 
Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report
 
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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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