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Is a Beat in the Cards for Nucor (NUE) This Earnings Season?

Zacks Equity Research
Updated

Nucor Corporation NUE is set to release first-quarter 2018 results before the opening bell on Apr 19.

Last quarter, the steel giant delivered a positive earnings surprise of 18.2% by posting adjusted earnings of 65 cents per share, which surpassed the Zacks Consensus Estimate of 55 cents.

Revenues increased roughly 28.7% year over year to $5,092.3 million in the fourth quarter, beating the Zacks Consensus Estimate of $4,960.2 million.

Nucor beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, delivering an average positive surprise of 2.7%.

Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.

Nucor Corporation Price and EPS Surprise

Nucor Corporation Price and EPS Surprise | Nucor Corporation Quote

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Earnings Whispers

Our proven model shows that Nucor is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:

Zacks ESP: Earnings ESP for Nucor for the first quarter is +0.61%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are currently pegged at $1.11 and $1.10, respectively. 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 #2, which when combined with a positive ESP, makes us reasonably confident of an earnings beat.

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors to Consider

Last month, Nucor provided guidance for first-quarter 2018. The company expects earnings in the band of $1.00-$1.05 per share. This reflects a decrease from $1.20 recorded in the previous quarter and $1.11 earned a year ago.  

Nucor noted that first-quarter projected figures include an expense of 7 cents per share related to a deferred tax assets write off as a result of changes in the tax status of a subsidiary. Barring non-operating items, the company expects first-quarter performance to be better than the previous quarter but flat year over year.

Nucor’s total sales for the first quarter are projected to sequentially increase by roughly 9% from the fourth quarter as the Zacks Consensus Estimate for the quarter is currently pegged at $5,550 million.

Earnings for Nucor’s steel mills unit are expected to improve sequentially in the first quarter as the company noted that average selling prices for steel mill product groups have witnessed an increase since the start of this year. The company expects this positive pricing momentum to continue in the second quarter.

Moreover, there is considerable optimism in steel end-use markets and the company is also encouraged by recent actions taken by the Trump administration to address the issue of illegally subsidized imports into the United States.

Nucor expects earnings in the steel products unit to sequentially decline in the first quarter due to seasonality while earnings in its raw materials unit are expected to improve.

Shares of Nucor have moved up 9.4% in the last six months, slightly underperforming the industry’s 10.6% growth.


 

Other Stocks Poised to Beat Estimates

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

Allegheny Technologies Incorporated ATI has an Earnings ESP of +9.38% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC Corporation FMC has an Earnings ESP of +1.43% and carries a Zacks Rank #2.  

Kinross Gold Corporation KGC has an Earnings ESP of +18.75% and carries a Zacks Rank #3.  

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FMC Corporation (FMC) : Free Stock Analysis Report
 
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Allegheny Technologies Incorporated (ATI) : Free Stock Analysis Report
 
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