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Buckle Your Seatbelts for Steel Companies' 1Q17 Earnings

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Part 6
Buckle Your Seatbelts for Steel Companies' 1Q17 Earnings PART 6 OF 9

Here’s Why Nucor’s Profits Are Expected to Surge in 1Q17

Nucor’s profits

Previously, we learned that analysts expect Nucor’s (NUE) 1Q17 revenue to rise steeply compared to the previous quarter.

In this article, we’ll look at analysts’ estimates for Nucor’s 1Q17 profitability. Specifically, we’ll look at analysts’ EBITDA (earnings before interest, tax, depreciation, and amortization) and EPS (earnings per share) estimates.

Here’s Why Nucor’s Profits Are Expected to Surge in 1Q17

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1Q17 consensus estimates

Analysts polled by Thomson Reuters expect Nucor to post adjusted EBITDA of $742 million in 1Q17. The company posted adjusted EBITDAs of $425 million in 4Q16 and $347 million in 1Q16. 

Nucor is expected to deliver EPS of $1.07 in 1Q17, compared to EPS of $0.50 in 4Q16 and $0.27 in 1Q16. Nucor has given EPS guidance of between $1.10 and $1.15 for 1Q17.

Key drivers

During its 1Q17 earnings guidance on March 16, 2017, Nucor said, “The expected improvement in earnings in the first quarter of 2017 compared to the fourth quarter of 2016 is primarily due to the performance of our steel mills segment. The increased profitability of the steel mills segment is driven by the improved performance of our sheet and plate mills.”

However, Nucor expects the profitability of its Downstream Steel Products segment to fall in 1Q17 due to the typical seasonal slowdown in the first quarter.

In its Raw Materials segment, Nucor expects its 1Q17 profits to be higher than in 4Q16 despite an unplanned outage at its Louisiana plant. When releasing its guidance, the company attributed its expected rise in profits to its scrap processing, Trinidad direct reduced iron facility (CLF) (MT) (X), and brokerage operations.

In the next article, we’ll look at AK Steel’s (AKS) 1Q17 earnings estimates.

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