Nucor earnings fell short of already-lowered Q3 estimates early Thursday, following an earnings beat from rival Steel Dynamics after the close on Wednesday. NUE stock fell solidly in early Thursday stock market action, while STLD stock rose modestly.
The solid earnings beat for Steel Dynamics came despite soft steel prices as the industry copes with supply additions. The company noted that realized flat rolled steel prices fell almost 15% during the quarter.
Meanwhile, Nucor cited "increasingly challenging market conditions."
In mid-September, Nucor and U.S. Steel both offered disappointing Q3 guidance, contributing to a group selloff. Nucor said shipping volumes would fall more than expected. U.S. Steel warned that headwinds had accelerated and said it was idling some capacity due to market conditions and elevated imports.
However, Steel Dynamics, which has ramped up to 65% of capacity at its new Sinton, Texas, facility, said Q3 shipments surpassed Q2's record.
Since mid-September, STLD stock has clearly outperformed — not only NUE but the S&P 500. However, Commercial Metals, which easily beat August fiscal Q4 earnings estimates last week, has been the biggest recent standout among steel stocks.
Commercial Metals, a leading producer of steel reinforcing bar, or rebar, is focused on a segment with less concern about oversupply. The infrastructure law signed in November 2021 should boost domestic demand for rebar by about 17%, Commercial Metals CEO Barbara Smith said on the Oct. 13 earnings call.
Steel Dynamics Earnings
Estimates: Analysts expect Steel Dynamics earnings per share of $5.19 in Q3, up 4.6% vs. a year earlier. Revenue is seen rising 7% to $5.44 billion.
Results: EPS rose 10% to $5.46, excluding start-up expense of 43 cents for the Sinton mill. Revenue grew 11% to $5.65 billion.
Outlook: "Despite weaker flat rolled steel pricing, our order activity and backlogs remain solid," the earnings statement said.
Nucor Earnings
Estimates: Nucor earnings should fall 8% vs. Q3 2021 to $6.71 a share. Revenue is seen slipping 1.5% to $9.99 billion.
Results: EPS slid 10% to $6.50, while revenue grew 2% to $10.5 billion.
Outlook: "As we approach the end of the year, we are seeing increasingly challenging market conditions amid economic uncertainty," Nucor said. The company added that Q4 earnings would be down sequentially, with bo Ahead of the Q3 report, analysts we're expecting EPS of $5.11 in Q4.
Steel Stocks: STLD, NUE, CMC
STLD stock edged up 0.7% early Thursday, while NUE stock fell 4.1%. CMC stock lost 1%.
Still, both STLD and CMC have been solidly outperforming the S&P 500, both recently and over the past 20 months. Both steel stocks' relative strength lines — the blue line in IBD charts that tracks their progress vs. the S&P 500 — have been hitting new 52-week highs.
STLD stock is 20% off April's record high, but it's within about 9% of an 88.72 buy point from an eight-week consolidation. Steel Dynamics is holding above its 50-day line. A decisive move above Tuesday's intraday high of 82.98 could offer an early entry, though the market conditions make any buys tricky.
CMC stock has climbed to within 9% of its all-time high in April. CMC stock is about 5% below a 10-week, cup-base buy point at 44.45.
Nucor, now 35% off its peak, still needs to reclaim its 50- and 200-day lines to merit inclusion on a watchlist.
U.S. Steel will likely report in the next couple of weeks. X stock, down 2.6% on Wednesday, has lost half its value from its April 52-week high.
