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Nucor Issues Q1 Outlook, Foresees Market Improvements

Nucor Corporation NUE has provided its outlook for the first quarter of 2016 (ending Apr 2, 2016). The company anticipates earnings for the first quarter to lie in the range of 20−25 cents per share, down significantly from 45 cents recorded in the preceding quarter, but comparable to 21 cents earned in the first quarter of 2015. Analysts polled by Zacks currently expect earnings of 27 cents per share for the first quarter on an average.

The company’s shares slipped roughly 1.7% in the trading session on Tuesday, reflecting the lower-than expected earnings guidance. The stock ended the day 0.2% lower at $45.05.

Nucor stated that it foresees modest improvement in market conditions. The company anticipates its steel mills segment to gain from a lower average cost of inventory at the beginning of the first quarter. Market conditions should be further backed by subsiding import volumes and more balanced inventory levels at service center customers.

Although nonresidential construction markets have slowed down owing to seasonal factors, the company anticipates an improvement in the space as the year progresses. Moreover, while the automotive markets remain strong, weakness in the energy, heavy equipment and agricultural markets prevails.

Although unfair imports continue to hurt the domestic steel industry, various trade cases are underway, with preliminary duties being declared by the Department of Commerce. The company is therefore optimistic that final decisions by the Department of Commerce will fully address all dumping and subsidies associated with these cases.

Nucor stated that despite the volatility in global markets, it anticipates improved profitability for full-year 2016 compared to 2015, excluding the impairment charges taken last year. The better results are expected to be backed by anticipated improvement in the performance of the steel mills and steel products segments.

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

Some better-ranked stocks in the basic materials sector include AK Steel Holding Corporation AKS, Usinas Siderurgicas de Minas Gerais S.A. USNZY and Harmony Gold Mining Company Limited HMY, all holding a Zacks Rank #2 (Buy).

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