US Steel Investors: Getting Ready for 3Q17 Earnings

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Part 6
US Steel Investors: Getting Ready for 3Q17 Earnings PART 6 OF 7

4 Things Markets Would Like to Hear in Nucor’s 3Q17 Call

Nucor’s 3Q17 earnings call

Nucor (NUE) is scheduled to hold its 3Q17 earnings call on October 19. Previously in this series, we’ve seen analysts’ expectations for Nucor’s 3Q17 earnings release. In this part of the series, we’ll see what the market would like to hear in Nucor’s 3Q17 earnings call.

4 Things Markets Would Like to Hear in Nucor’s 3Q17 Call

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Steel scrap prices

Steel scrap prices have been quite weak in October. Nucor is North America’s largest recycler, and it mainly uses steel scrap to feed its electric arc furnaces. In comparison, companies like U.S. Steel Corporation (X) and AK Steel (AKS) mainly use iron ore (CLF). During their 3Q17 earnings call, markets might watch for Nucor’s views on the recent decline in steel scrap prices. Notably, there’s a sense of apprehension in steel markets that falling steel scrap prices could also drive steel prices down.

Nucor might also want to touch upon the frequent outages at its DRI (direct reduced iron) facility. As we noted previously, the outage is expected to hurt 3Q17 profitability.

Section 232 imports probe

Markets might also watch for what Nucor’s management has to say on the Section 232 imports probe that was ordered by the Trump administration earlier this year. Notably, during the 2Q17 earnings call, Nucor seemed to have toned down its expectations from the Section 232 probe. Nucor’s CEO, John Ferriola, noted during the company’s 2Q17 earnings call, “My take on it, frankly, right now, is that it’s probably not going to be everything we hope it to be. But it’s certainly going to be more than we have right now.”

Share buyback

Nucor could also face questions about a special dividend or share buyback. During the 1Q17 earnings call, James Frias, Nucor’s CFO, said that the company would decide by the end of the year how to “return cash to shareholders.” Although steel market conditions have weakened somewhat since then, Nucor is still flush with cash.

In the next and final part of this series, we’ll see what analysts are projecting for Commercial Metals Company’s (CMC) fiscal 4Q17 earnings.


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