Shares of Nucor Corporation (NUE) rose after it announced its guidance for the third quarter of 2014 (ending Oct 4, 2014). The North Carolina-based steel maker envisions earnings for the quarter to be in the band of 70 cents to 75 cents per share, up from 46 cents registered a year ago as well as in the previous quarter. Analysts polled by Zacks are currently expecting earnings of 65 cents a share on average for the quarter.
Nucor’s shares gained roughly 4% to close at $57.81 yesterday. The stock has delivered a one-year return of around 20%.
Nucor expects its third-quarter results to include LIFO credit of $14.5 million. This compares to no charge or credit recorded in the second quarter of 2014 and a credit of $18 million recorded in the third quarter of 2013. Earnings in the third quarter are also expected to include a charge of $12 million related to the partial write down of assets within the steel mills segment. Nucor stated that its performance is consistent with its expectations supporting the qualitative guidance issued during its second-quarter 2014 earnings release.
Nucor expects the steel mills segment’s operating performance to improve in the third quarter compared with the second quarter due to increased profitability in sheet, structural, bar and plate steel. Structural steel did not experience any major outages in the third quarter, compared with the planned three week outage at Nucor-Yamato Steel in the second quarter. However the company expects high imports to put downward pressure on pricing.
Improved conditions in the non-residential construction markets are expected to enhance performance of the fabricated construction products businesses in the third quarter compared with the prior quarter.
Within the raw materials segment, an operating loss of $27 million (5 cents per share) is expected at the company’s new direct reduced iron plant in St. James Parish, LA. Due to process improvements and lower iron ore costs, along with a steady run-rate, Nucor anticipates profitable performance at the Louisiana DRI facility by the end of 2014.
Nucor currently carries a Zacks Rank #3 (Hold).
Other companies in the steel industry with favorable Zacks Rank include Grupo Simec S.A.B. de C.V. (SIM), TimkenSteel Corporation (TMST) and United States Steel Corp. (X). All of these stocks sport a Zacks Rank #1 (Strong Buy).
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