Nucor (NUE) Up 5.3% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Nucor (NUE). Shares have added about 5.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Nucor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Nucor's Earnings and Revenues Surpass Estimates in Q3

Nucor’s profits declined year over year in third-quarter 2020. The company logged net earnings of $193.4 million or 63 cents per share for the reported quarter, down from $275 million or 90 cents in the year-ago quarter. However, earnings per share for the reported quarter topped the Zacks Consensus Estimate of 53 cents.

Nucor recorded net sales of $4,928 million, down 10% year over year. Nevertheless, the figure beat the Zacks Consensus Estimate of $4,454.7 million.

The company stated that non-residential construction markets were strong in the third quarter. Moreover, recovery accelerated in the automotive market.

Operating Figures

Total steel mills shipments in the third quarter were 5,626,000 tons, down 3% year over year. Total tons shipped to outside customers were also down 3% year over year to 6,367,000 tons.  Moreover, average sales price declined 7% year over year.

Steel mill operating rates were 83% in the third quarter, flat compared with the year-ago quarter.

Segment Highlights

Performance of the company’s steel mills unit improved sequentially in the third quarter, driven by its bar and structural mills. However, challenging market conditions for its plate and sheet mills continued in the quarter.

Profitability of the steel products unit increased sequentially in the third quarter on the back of continued strength in non-residential construction markets.

Moreover, profitability in the raw materials unit improved in the reported quarter compared with second-quarter levels on improved pricing reflecting stronger steel demand.

Financial Position

At the end of the third quarter, cash and cash equivalents surged roughly 70% year over year to $2,866.6 million. Long-term debt was $5,452.2 million, up around 27% year over year.

For the first nine months, net cash generated from operating activities rose 4% year over year to around $2.2 billion.

Outlook

Nucor expects higher earnings in the fourth quarter compared with the third-quarter levels, mainly due to improved pricing at its sheet and plate mills. The company also expects raw materials unit’s earnings to increase sequentially in the fourth quarter due to improved margins at its direct reduced iron facilities.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 38.56% due to these changes.

VGM Scores

Currently, Nucor has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Nucor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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