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How Wall Street Sees Steel Stocks ahead of 4Q17

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Part 7
How Wall Street Sees Steel Stocks ahead of 4Q17 PART 7 OF 8

Could Nucor Be a Winner in 4Q17? Analyzing Analysts’ Views

Analysts’ views

Nucor (NUE), which is now the leading US-based steelmaker, has lost 10.1% so far in 2017, based on September 12 closing prices. Last year, the stock rose 47.6% as rising steel prices and Donald Trump’s election boosted steel market sentiment. In this article, we’ll see how analysts are rating Nucor.

Could Nucor Be a Winner in 4Q17? Analyzing Analysts’ Views

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Nucor carries a consensus one-year price target of $66.88, which represents 25.0% upside over its September 12 closing prices. Looking at other steelmakers, we see that U.S. Steel (X) and ArcelorMittal (MT) are respectively trading 5.0% and 20.6% below their consensus price targets. Nucor has received a “strong buy” rating from three analysts while six analysts rate the stock as a “buy.” The remaining six analysts rate Nucor as a “hold.”

Outlook

In 1H17, Nucor posted its best first-half profitability since 2008. Steel market conditions look stable in the near term, which could support Nucor in 4Q17. Furthermore, looking at the current markets and previous statements from Nucor’s management, investors could expect a special dividend or a share buyback in the near term.

While steel market sentiments have turned somber amid fading expectations from the ongoing Section 232 imports probe, in our view, markets could be getting a little pessimistic about Nucor. The company’s variable cost structure and strong balance sheet make it a standout in an otherwise volatile steel market (XME).

Steel Dynamics (STLD) also has a strong balance sheet. In the next and final part of this series, we’ll see how analysts are rating Steel Dynamics.

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