Nucor Stock (NUE) Plunges Following Weak Q3 Earnings Preview

Nucor Corporation (NUE) is facing downward pressure as its stock price reacts to a disappointing third-quarter earnings guidance. The steel manufacturer anticipates earnings per diluted share to fall between $2.05 and $2.15, significantly below the consensus estimate of $2.63, triggering concerns.

The market responded negatively to the announcement, with Nucor’s stock price declining and currently hovering above $137 in pre-market hours. This price action reflects market anxieties regarding the company's near-term profitability outlook and the broader headwinds impacting the steel industry.

Nucor attributes the expected earnings decline to challenges across all three of its operating segments. The steel mills segment is projected to suffer from reduced volumes and margin compression, while the steel products segment anticipates higher average costs per ton despite stable pricing and volumes. The raw materials segment is also expected to experience lower profitability due to challenges in scrap processing operations.

The anticipated dip in Q3 earnings follows a second quarter where Nucor reported a profit of $2.60 per share, a decrease from $2.68 per share in the same period the previous year, despite a 4.7% increase in revenue to $8.46 billion. During that time, the company cited increased raw material costs as a significant factor impacting its steelmaking operations, a trend that appears to be continuing into the third quarter.

Despite the projected earnings slump, Nucor has remained committed to returning value to its shareholders. During the third quarter, the company repurchased approximately 0.7 million shares at an average price of $140.46 per share. Year-to-date, Nucor has repurchased about 4.8 million shares at an average price of $126.26, returning approximately $985 million to stockholders through share repurchases and dividends.

The broader steel industry is grappling with rising raw material costs and fluctuating demand, creating a challenging environment for key players like Nucor. These macroeconomic factors, combined with company-specific operational challenges, are contributing to the current earnings pressure.

Looking ahead, markets will be closely watching Nucor's full third-quarter results, scheduled for release after market close on October 27th, with a conference call to follow the next morning. The company’s performance and management’s commentary will provide further insight into Nucor’s strategy for navigating the current industry headwinds.

Nucor's stock’s reaction to the Q3 preview underscores the sensitivity of the market to earnings forecasts and the challenges facing the steel industry, which could influence market sentiment moving forward.