Nucor's (NUE) Q1 Earnings Trail Estimates, Revenues Top

Nucor (NYSE:NUE) saw its profits surge year over year in the first quarter of 2017 on higher sales, but its earnings fell short of expectations.

The steel giant logged a profit of $356.9 million or $1.11 per share for the first quarter, a four-fold jump from $87.6 million or 27 cents per share it registered a year ago. Earnings per share for the reported quarter, however, trailed the Zacks Consensus Estimate of $1.14.

Revenues climbed around 30% year over year to $4,815.2 million in the reported quarter. Sales comfortably beat the Zacks Consensus Estimate of $4,698 million.

Operating Stats

Total steel mills shipments in the first quarter were 6,147,000 tons, up 9% year over year. Total tons shipped to outside customers were up 7% year over year to 6,584,000 tons. Average sales price in the quarter were up 21% year over year.

Steel mill operating rates rose to 89% in the reported quarter from 80% a year ago.

Segment Highlights

Nucor saw increased profitability in its Steel Mills segment in the first quarter compared with the previous quarter on the back of improved performance of its sheet, bar and plate mills.

The performance of Nucor’s Raw Materials segment in the first quarter improved compared with the fourth due to improved performance of scrap processing segment and brokerage operations as well as in its direct reduced iron (“DRI”) facility in Trinidad.

Nucor, however, saw reduced profitability in its Steel Products segment on a sequential comparison basis in the first quarter due to seasonality.

Financial Position

Nucor ended the quarter with cash and cash equivalents of around $1,658 million, down roughly 27%. Long-term debt was $3,739.9 million, down around 14% year over year.

Outlook

Moving ahead, Nucor expects earnings in second-quarter 2017 to increase on a sequential comparison basis.

The company envisions an improvement in performance in its Steel Mills segment in the second quarter compared with the first on improved metal margins at its sheet mills. Nucor also expects higher profitability in its Downstream Products segment in the second quarter on a sequential comparison basis as improving weather conditions are expected to benefit non-residential construction markets.

Moreover, the company expects performance of its Raw Materials segment to improve in the second quarter vis-à-vis the first on improved profitability of its DRI facilities.

Nucor has outperformed the Zacks categorized Steel-Producers industry over the past six months. The company's shares rallied around 21.5% over this period while the industry saw a gain of 7.6%.

Nucor remains committed to expand its production capabilities and grow its business through strategic acquisitions. The company is also seeing continued momentum in the automotive market.

Nucor is a Zacks Rank #1 (Strong Buy).

Other Stocks to Consider

Other well-placed companies in the steel space include United States Steel Corporation (NYSE:X) , Ternium S.A. (NYSE:X) and ArcelorMittal (NYSE:MT) , all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

U.S. Steel has an expected long-term growth of 8%.

Ternium has an expected long-term growth of 18.4%.

ArcelorMittal has an expected long-term growth of 10.9%.

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