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NUE and X to Report Q1 Earnings: What Should You Watch?

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  • The first-quarter earnings season is in full swing. This week, Nucor (NYSE:NUE) and U.S. Steel Corporation (NYSE
    X) will likely release their first-quarter earnings. Steel Dynamics (NASDAQ:STLD) reported its first-quarter earnings last week.
  • US steel prices have fallen over the last month amid the COVID-19 pandemic. There has been a wave of plant curtailments, which has led to job losses.
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NUE and X’s upcoming earnings

Steel Dynamics released its first-quarter earnings last week. The company posted better-than-expected earnings. Nucor and U.S. Steel Corporation will likely release their earnings this week. Nucor’s first-quarter earnings are scheduled for April 28, while U.S. Steel Corporation will likely release its first-quarter earnings on April 30. U.S. Steel Corporation will hold its first-quarter earnings conference call on May 1. Notably, both X and NUE provided their first-quarter earnings guidance in mid-March. However, a lot has changed since then. COVID-19 has taken a toll on the US and global economy.

Analysts’ estimates for NUE Q1 earnings

The analysts polled by Thomson Reuters expect Nucor to post revenues of $5.4 billion in the first quarter. NUE posted revenues of $5.1 billion in the fourth quarter of 2019 and $6.1 billion in the first quarter of 2019. US steel prices have fallen over the last year. While we saw some recovery towards the end of 2019, the COVID-19 pandemic had a negative impact on the pricing scenario. NUE will likely post an EPS of $0.95 in the first quarter compared to $0.52 in the fourth quarter of 2019.

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X’s Q1 earnings estimates

Analysts expect U.S. Steel Corporation to post revenues of $2.78 billion in the first quarter compared to $2.82 billion in the fourth quarter of 2019. While Nucor will likely post sequentially higher revenues in the first quarter, U.S. Steel Corporation’s revenues will likely fall. X is among the worst affected steel companies amid the COVID-19 pandemic. Analysts expect U.S. Steel Corporation to post an adjusted EBITDA of $38 million in the first quarter and -$4 million in the second quarter. In my view, the estimates look aggressive given the deterioration in US steel prices and X’s relatively higher fixed costs.

US steel prices

During the first-quarter earnings call, Steel Dynamics said that it will continue its expansion plans. U.S. Steel Corporation announced capacity curtailments. Falling energy prices have reduced the demand for products that the Tubular segment produces. X has also curtailed some of its flat-rolled capacity. During the first-quarter earnings call, NUE might also clarify its position on its capex plans amid the pandemic. That said, Nucor’s balance sheet strength gives it the flexibility to proceed with the investments even though US steel prices have fallen to multiyear lows. Unfortunately, U.S. Steel Corporation doesn’t have that privilege. Read U.S. Steel Is in Trouble, Not Due to Coronavirus to learn more.

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