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Nucor Sees Downstream Products Earnings to Improve in Q3

Nucor Corporation NUE has issued its guidance for third-quarter 2020 (ending Oct 3, 2020).

The steel giant expects earnings per share (EPS) between 50 cents and 55 cents for third-quarter 2020. The guidance suggests a sequential rise from EPS of 36 cents in the second quarter and a fall from 90 cents recorded in the year-ago quarter.

Nucor’s downstream products segment is witnessing a strong quarter driven by the resiliency of non-residential construction markets. The company expects earnings for the segment to rise sequentially in the third quarter.

In the third quarter, the company expects financial results of the steel mills segment to be in line with the second quarter’s performance.

Further, Nucor’s bar and structural mills are gaining from non-residential construction markets but the market conditions for sheet and plate mills remain challenging. It expects the performance in the raw materials segment in the third quarter to decline sequentially due to lower pricing for DRI.

Notably, Nucor witnessed a rise in demand and pricing for raw materials as well as sheet steel in the later part of the third quarter of 2020. Also, utilization rates for its sheet mills have improved throughout the third quarter. However, the company is cautiously optimistic regarding the impacts of these developments in its fourth-quarter results.

Nucor’s shares have lost 7.1% in the past year compared with the industry’s 9.2% decline.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Eldorado Gold Corporation EGO, Kirkland Lake Gold Ltd. KL and Yamana Gold Inc. AUY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Eldorado Gold has an expected earnings growth rate of 2,325% for 2020. The company’s shares have surged 42% in the past year.

Kirkland Lake Gold has an expected earnings growth rate of 22.6% for 2020. Its shares have returned 10.7% in the past year.

Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have soared 79.1% in the past year.

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