Zacks Analyst Blog Highlights: Nucor, Steel Dynamics, United States Steel and Olympic Steel
For immediate release
Chicago, IL – October 15, 2021 – Zacks.com announces the list of stocks featured on the Analysts Blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Recent actions featured in the blog include: Nucor Corp. NUE, Steel Dynamics, Inc. STLD, United States Steel Corp. X and Olympic Steel, Inc. ZEUS.
Here are highlights from Thursday’s analyst blog:
Will record prices help high prices post a third quarter collapse?
The steel industry rests on solid foundations, driven by historically high steel prices and the resurgence of demand in the main end markets. Strong demand and soaring prices helped steel companies post strong second quarter results.
Good earnings forecasts from some of the major US steelmakers also sparked optimism for a strong third quarter for the steel industry.
Steel stocks come full circle for a bumper third quarter earnings season? We will take a look.
Optimistic advice on the profits of the big steel players
Last month, some leading steel producers presented optimistic forecasts for the September quarter. Nucor Corp. said it expects to post record quarterly profits in the third quarter, driven by strong demand in most of its end markets and higher average selling prices. The steel giant expects earnings between $ 7.30 and $ 7.40 per share for the third quarter. Nucor expects to post the highest quarterly profits in its history, surpassing the previous record of $ 5.04 recorded in the second quarter of 2021.
Steel dynamicsAlso posted a record quarterly performance, supported by strong underlying steel demand and a significant expansion in metal spreading, particularly in flat rolled steel operations. It projects third quarter earnings in the range of $ 4.78 to $ 4.82 per share, suggesting a record quarterly performance. He expects adjusted third quarter earnings in the range of $ 4.88 to $ 4.92 per share. Steel shipments in the third quarter are expected to be significant across the company’s overall steel portfolio.
What’s more, United States Steel expects record third quarter results thanks to its Best for All business model, solid reliability and quality performance, continued customer demand as well as a sustained increase in selling prices for the steel. The company is forecasting adjusted EBITDA of around $ 2 billion, which suggests an increase from the second quarter figure of around $ 1.3 billion.
Olympic steel, in August, also said it expects a strong third quarter thanks to strong market momentum and record prices. Healthy demand has helped the company’s shipping volumes return to pre-pandemic levels.
Robust demand, price rally to increase profit margins
Third quarter steel company profits are expected to reflect strong underlying demand and a significant rise in steel prices. Steel demand started to recover from the third quarter of last year with the resumption of operations in major steel consuming sectors, following the relaxation of pandemic-induced restrictions around the world.
Steelmakers are expected to have continued healthy orders in the automotive market in the third quarter, despite the semiconductor crisis. Orders in non-residential construction and equipment are also expected to be strong in the quarter. The impact of strong demand in key markets is likely to be reflected in steel companies’ shipment volumes in the third quarter.
Steel prices also rose to record highs due to strong demand, tight supply and low inventory in the global steel supply chain. US steel prices have been rising at an unprecedented level this year, supported by strong underlying supply and demand fundamentals. Hot-rolled coil (âHRCâ) benchmark prices exceeded $ 1,900 per short ton in August 2021 and remained above that level until September. HRC prices are more than four times higher than the multi-year low recorded in August 2020.
The main reason for the sharp rise in steel prices is the imbalance between supply and demand. While demand remains robust, production disruptions along with high Section 232 tariffs have tightened steel supplies. Scrap metal prices, the main raw material for electric arc furnace steel producers, also remain high in a context of tight supply.
The effects of the surge in prices should be reflected in the results of steel companies for the third quarter. Rising steel prices likely boosted steelmakers’ selling prices and led to their profit margins and cash flow in the quarter to be released. In particular, US steel companies should have benefited from widening spreads, as a strong surge in steel prices more than offset rising raw material costs.
Zacks investment research
800-767-3771 ext 9339
Past performance is no guarantee of future results. The potential for loss is inherent in any investment. This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether an investment is suitable for a particular investor. It should not be assumed that any investment in any identified and described securities, companies, sectors or markets was or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or securities asset management activities. These returns come from hypothetical portfolios composed of stocks with a Zacks rank = 1 that have been rebalanced monthly without any transaction costs. These are not the returns of actual equity portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance numbers displayed in this press release.
Boom in infrastructure stocks will sweep America
A massive push to rebuild crumbling American infrastructure will soon be underway. It is bipartisan, urgent and inevitable. Billions will be spent. Fortunes will be made.
The only question is, “Are you going to jump into good stocks early when they have the greatest potential for growth?” “
Zacks published a special report to help you do just that, and today it’s free. Discover 7 special companies looking to make the most of the construction and repair of roads, bridges and buildings, as well as transporting goods and transforming energy on an almost unimaginable scale.
Download FREE: How to Profit from Trillions in Infrastructure Spending >>
Click to get this free report
Steel Dynamics, Inc. (STLD): Free Stock Analysis Report
United States Steel Corporation (X): Free Stock Analysis Report
Nucor Corporation (NUE): Free Stock Analysis Report
Olympic Steel, Inc. (ZEUS): Free Stock Analysis Report
To read this article on Zacks.com, click here.
Zacks investment research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.