Nucor Beats Its Self-Lowered Bar For Q4

There’s an emerging trend of Nucor (NUE) and Steel Dynamics (STLD) lowering guidance at their mid-quarter updates only to later beat those projections. Draw your own conclusions from that, but at a minimum it suggests low visibility into the business, which is why I think it’s a little funny that at least some sell-side analysts take guidance from these companies as though it were fait accompli.

As I said in my review of STLD’s earnings report, I don’t think the U.S. steel market is going to be as accommodating to these steel companies as managements are projecting. I believe underlying demand is still soft and I think the recent price surge is going to fade after the first quarter. That said, I still respect the operating quality of Nucor and I like it’s leverage to higher-value areas like long products and the consolidated U.S. rebar market.

When I last wrote on Nucor, I said that I preferred Steel Dynamics and Ternium (TX) to Nucor. Since then, both have outperformed (or performed less badly, more accurately), with roughly 5% declines to Nucor’s 14% decline. I still see better relative value in Steel Dynamics and Ternium at this point.

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Nucor Beats Its Self-Lowered Bar For Q4