Nucor’s Q4 Earnings Guidance Disappoints; Shares Drop

Nucor Corporation (NYSE: NUE) has provided earnings guidance of $7.65 to $7.75 per share for the fourth quarter of 2021. Though it is expected to be the highest quarterly earnings in the company’s history, it missed the Street’s expectations of $7.95 per share.

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Following the disappointing outlook, shares of the manufacturer of steel and steel products dropped 8.6% to close at $108.22 on Wednesday.

Expectations

In the fourth quarter, the company expects the Steel mills segment to record strong earnings despite a year-end seasonal drop in volumes. Notably, earnings from the steel products segment are likely to be high on the back of robust demand in non-residential construction markets.

However, lower earnings on a sequential basis are expected in the Raw materials segment, mainly impacted by lower margins at Nucor’s direct reduced iron facilities.

Looking ahead, the company said, “As we approach the end of the most profitable year in Nucor’s history, demand continues to be strong in most of the end markets we serve. We are confident that 2022 will be another year of strong profitability for Nucor.”

Capital Deployment

During the fourth quarter, the company has repurchased around 13.5 million shares at an average price of $111.63 per share. Year-to-date, 33.8 million shares have been repurchased at an average price of $96.92 per share.

Nucor has returned over $3.7 billion to shareholders in the form of share repurchases and dividend payments so far this year.

Wall Street’s Take

On December 10, J.P. Morgan analyst Michael Glick maintained a Hold rating on the stock and decreased the price target to $102 (5.75% downside potential) from $118.

Overall, the stock has a Hold consensus rating based on 7 Holds versus 1 Buy. The average Nucor price target of $115.38 implies 6.62% upside potential to current levels. Shares have gained 8.3% over the past six months.

Smart Score

According to TipRanks’ Smart Score system, Nucor gets a 7 out of 10, which indicates that the stock is likely to perform in line with market averages.