Analysts Favor Nucor despite Tariff Concerns




Among the analysts polled by Thomas Reuters on July 6, four analysts rate Nucor (NUE) as a “strong buy,” seven analysts rate it as a “buy” or some equivalent, and four analysts rate it as a “hold.” Nucor hasn’t received any “sell” ratings. The stock’s mean consensus target price of $77.7 represents 22.6% upside over its closing prices on July 6.

Notably, after the sharp rally in the first half of 2018, there are concerns about whether steel prices’ current level is sustainable in the United States. Recently, Bank of America Merrill Lynch noted that the fall in the Turkish currency could lift US rebar imports (CLF). The brokerage downgraded Commercial Metals Company (CMC). Bank of America prefers Nucor and Steel Dynamics (STLD) over Commerical Metals Company. AK Steel (AKS) was also downgraded by Goldman Sachs in May.

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Second-quarter earnings

Nucor is scheduled to release its second-quarter earnings on July 19. Analysts polled by Thomson Reuters expect the company to post revenues of $6.34 billion in the quarter. In comparison, Nucor posted revenues of $5.56 billion in the first quarter and $5.17 billion in the second quarter of 2017. Nucor is expected to post an EPS of $2.04 during the quarter. The company posted an EPS of $1.10 in the first quarter and $1.00 in the second quarter of 2017. Looking at Nucor’s guidance, it expects to post an EPS of $2.05–$2.10 in the second quarter. While releasing its second-quarter guidance, Nucor sounded upbeat about US steel industry’s outlook. Read US Steel in Q2 2018: Guidance, Analysts’ Action, and Trump for a detailed analysis of Nucor’s second-quarter guidance.

Next, we’ll discuss how analysts rate Steel Dynamics.


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