New Headwinds For Nucor, But Still Some Value
Stephen Simpson, CFA
Stephen Simpson, CFA
Share, Prices, And Costs Seem To Be Working In Nucor's Long-Term Favor
Stephen Simpson, CFA
Stephen Simpson, CFA
Thu, Jul. 21, 3:58 PM
- Nucor (NUE -3.1%) is lower even after reporting Q2 EPS of $0.73, ahead of analyst consensus; NUE had pre-annouced a month ago for EPS of $0.65-$0.70 vs. $0.56 consensus at the time.
- Even with a Y/Y revenue decline to a below consensus $4.25B, NUE said the overall operating rate at its steel mills rose 10% in the quarter from the previous year, as the cost of energy and scrap materials dropped.
- NUE says average Q2 sales price per ton rose 9% Y/Y but fell 9% Y/Y, but the company expects another strong Q/Q improvement in its earnings for Q3.
- NUE announced yesterday that it will pay $29M to purchase Joy Global's steel plate mill in Longview, Tex.
Thu, Jul. 21, 9:04 AM
Wed, Jul. 20, 5:30 PM| Wed, Jul. 20, 5:30 PM | 13 Comments
Wed, Jul. 20, 3:56 PM
- Nucor (NUE -2.8%) is downgraded to Neutral from Buy with a $56 price target at BofA Merrill Lynch, citing a more cautious view on H2 market conditions, fuller valuation and cautious comments on long products from Steel Dynamics (STLD -1.5%).
- The downgrade comes as NUE is scheduled to report Q2 results tomorrow, when the firm believes investors will focus on how much spare capacity the company might be able to contribute to a relatively tight sheet market after reportedly operating at 105% of capacity at its sheet mills.
- BofA adds that NUE has more long products exposure than STLD at ~39% of 2015 sales, and has been growing volumes in its fabricated segment.
Wed, Jul. 6, 6:25 PM
- The view on steel stocks has become “less negative” as metals and mining commodity prices rallied ~13% in Q2, Deutsche Bank's Amy Tan says, while still preferring companies with gold exposure.
- China's stimulus created a financing window in April, effectively allowing most North American M&M companies to either re-capitalize strained balance sheets or extend near-term debt maturities into future periods, according to Tan.
- Citing the improved steel price outlook and balance sheet refinancing, the firm upgraded U.S. Steel (NYSE:X) to Hold from Buy with a $15 price target, raised from $8, and Nucor (NYSE:NUE) to Buy from Hold with a $60 target, up from $52; highly leveraged AK Steel (NYSE:AKS) remains rated Sell.
- Tan also upgraded Kinross Gold (NYSE:KGC) to Hold from Sell on valuation, and raised the stock price target for Buy-rated Newmont Mining (NYSE:NEM) to $44 from $38.
Wed, Jul. 6, 10:58 AM
- Kinder Morgan (KMI -1.3%) says it signed a 10-year, $900M agreement with Nucor (NUE +1.5%) to provide in-plant services for five facilities that produce ~13.4M tons/year of steel products.
- KMI says it will be handling ~14.8M tons/year of scrap steel, direct-reduced iron, pig iron and other feedstocks, as well as providing other ancillary services.
- KMI says the deal provides NUE and other customers access to its growing national network of marine and rail terminals, and reconfirms its commitment to growing its terminals business.
Wed, Jun. 22, 5:21 PM
- The U.S. will slap duties of more than 500% on imports of certain steel products from China, the International Trade Commission rules after the U.S. Commerce Department recommended last month that heavy duties to be imposed on imports of cold-rolled steel products from China and Japan.
- The anti-dumping case brought last year is one of three under consideration this summer and comes amid a growing dispute between the U.S. and China over steel.
- Relevant tickers: X, AKS, NUE, MT, STLD
Wed, Jun. 15, 3:25 PM
- Steel companies are surging after Nucor (NUE +2.1%) released better than expected guidance and Bank of America upgraded U.S. Steel (X +8.4%) to Neutral from Underperform with an $18 price target, raised from $10, citing more stable earnings and higher steel prices.
- Nucor's upbeat commentary follows Steel Dynamics' (STLD +3.1%) upside Q2 guidance issued earlier this week, citing improved metals spread and shipments, and both of which follow May's U.S. Commerce Department ruling that it is imposing a 266% tariff on Chinese cold-rolled steel imports.
- BofA now forecasts $673M in 2016 EBITDA for U.S. Steel vs. consensus forecasts of $424M, based on the higher prices.
- The firm also praises U.S. Steel's ability to push out its debt maturities, although leverage remains steep with total debt at ~5x projected EBITDA.
- Also: AKS +8.3%, CLF +3.7%, MT +4.1%.
Wed, Jun. 15, 9:19 AM
- Nucor (NYSE:NUE) +1.6% premarket after issuing upside guidance for Q2 earnings; NUE now sees Q2 EPS of $0.65-$0.70 vs. the $0.56 analyst consensus estimate, Q1 EPS of $0.22 and year-ago quarter EPS of $0.39.
- NUE expects a "much improved" Q2 performance in the steel mills segment due to higher average selling prices and improved volumes, and notes that sheet mills have benefited from lower inventory levels in the supply chain, mainly at service centers, and decreased levels of imports.
- NUE also sees improvement in the downstream products segment due to seasonal factors and the gradual improvement in non-residential construction markets.
- Related tickers include X, AKS, STLD.
Thu, Jun. 9, 8:51 AM
- Nucor (NYSE:NUE) says it is forming a 50-50 joint venture with JFE Steel, Japan's no. 2 steel mill, to build and operate a $270M plant in Mexico to supply that country's automotive market.
- The companies expect the plant to have a capacity of 400K metric tons/year of galvanized sheet steel.
- The companies say the JV positions NUE with improved geographic reach and expanded product offering to address projected 50% growth in Mexico's automotive production and builds on JFE's commitment to serve the NAFTA market.
Wed, Jun. 8, 10:18 AM
- AK Steel (AKS +10.5%) surges more than 10% as Credit Suisse upgrades shares to Outperform from Neutral with a $7 price target, doubled from $3.50, after the firm increases its U.S. steel price deck.
- Credit Suisse says it remains "very bullish" on the U.S. steel industry, and its new supply/demand model for the U.S. flat rolled market indicates continued deficits for value add sheet into Q3, supporting prices well above fair value levels.
- The firm raises its price targets on all steel stocks in its coverage universe except Commercial Metals (CMC +1.9%), owing to rebar spread risks.
- Steel stocks (SLX +2.8%) are broadly higher in early trading: X +6.8%, MT +3.9%, STLD +3.8%, NUE +2.4%, WOR +1.5%, ZEUS +1.4%.
Mon, Jun. 6, 11:58 AM
- Steel stocks (SLX +2.1%) are higher as U.S. Treasury Secretary Lew blames China for flooding low-cost steel into the U.S. and other markets.
- Lew is urging China to cut excess steel production, as the two countries open high-level talks overshadowed by tension over the South China Sea.
- "The Chinese government is... engaged in economic warfare against the U.S. and sadly, they are winning,” Nucor (NUE +0.3%) CEO John Ferriola says in a WSJ interview, adding that China two months ago set a new production record after spending two years promising to cut production.
- Steel producers are mostly higher: X +2.9%, MT +2.1%, CLF +2.8%, AKS -1%, STLD +0.3%, RS +0.4%.
Mon, Jun. 6, 9:04 AM
Thu, May 26, 8:19 AM
- U.S. steel companies surge in premarket trading after the U.S. announced heavy anti-dumping and anti-subsidy duties on corrosion-resistant steel from China, in the latest U.S. clampdown on a glut of steel imports.
- The Commerce Department issued duties of as much as 450% on Chinese producers of corrosion-resistant steel, as well as duties of 3%-92% on producers from Italy, India, South Korea and Taiwan.
- The final U.S. anti-dumping duties on the Chinese products replace preliminary duties of 256% issued in December.
- Last week the Commerce Department issued punitive tariffs of more than 500% on Chinese cold-rolled flat steel.
- AKS +7%, X +5.6%, CLF +4.8%, NUE +2.3%, STLD +1.6% premarket.
Wed, May 18, 5:09 AM
- The United States has ramped up import duties on Chinese steel makers by 522%, accusing Beijing of anti-competitive behavior by selling steel below cost.
- Last year, U.S. Steel (NYSE:X), AK Steel (NYSE:AKS), ArcelorMittal (NYSE:MT), Nucor (NYSE:NUE) and Steel Dynamics (NASDAQ:STLD), all filed a complaint to the International Trade Commission, alleging foreign companies were selling steel at unfairly low prices.
- The industry claims it has had to lay off 12K workers as a result of unfair competition.
- ETFs: SLX
Tue, May 17, 5:43 PM
- May has been rough for stocks of steel companies, but Cowen analysts say investors should be cautious before buying the dip.
- The firm thinks the spike in prices for Chinese hot rolled coil and iron ore will not last long, and that ongoing efforts to contain the HRC dumping experienced since 2014 may have little impact in the U.S. should the Chinese ship products to another country, which then in turn displaces product to the U.S., resulting in increased supply driving prices lower.
- The firm rates U.S. Steel (NYSE:X), AK Steel (NYSE:AKS), Nucor (NYSE:NUE) and ArcelorMittal (NYSE:MT) at Market Perform, with Steel Dynamics (NASDAQ:STLD) and Reliance Steel (NYSE:RS) at Outperform.
- Separately, the U.S. today set final anti-dumping duties of 265.79% on imports of cold-rolled flat steel from China and 71.35% on imports from Japan.
Nucor Corp. manufactures steel and steel products. The company operates through three segments: Steel Mills, Steel Products and Raw Materials. The Steel Mills segment produces and distributes sheet steel, plate steel, structural steel, and bar steel. It sells these products primarily to steel... More
Sector: Basic Materials
Industry: Steel & Iron
Country: United States
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