Tags: Nucor | profits | growth | NUE

Nucor Profits but Growth Uncertain

By    |   Monday, 28 Nov 2011 02:01 PM

Steel producer Nucor Corp. (NUE) is the largest steel producer in North America and produces a diversified mix of products. For 2011, the company has experienced significantly increasing profits, but economic conditions make future growth uncertain.

Nucor produces iron and steel products at more than 50 locations in the United States and in 10 other countries. Products are divided into three segments: Steel products for construction include girders and joists, steel framing products, metal building systems and floor and roof systems. Steel products for manufacturing include bars, plate, sheet, rods and wire. Raw materials include metals scrap and direct reduced iron. Nucor also produces fastener products focused on structural nuts, bolts and screws.

For the first three quarters of 2011, Nucor generated sales of $15.2 billion, up from $12 billion a year earlier. Revenue growth was due to a 4 percent increase in tons shipped and a 22 percent increase in the average price received per ton.

Net income for the nine months was $2.02 per share, up from 46 cents a year earlier. For the full year, Nucor is forecast to earn $2.44 per share, compared to 44 cents earnings in 2010. The 2012 consensus earnings estimate is $3.13 per share.

Diversified lineup

The range of products sold by Nucor gives to company some protection against a single sector slowdown. However, the two big users of steel products are commercial construction and manufacturing, including autos and equipment. Both of these sectors are subject to their own economic cycles and slowdowns in these areas will affect the sales of Nucor.

Recent comments from the world's largest steel producer ArcelorMittal (MT) noted third quarter sales were down from earlier in 2011 and steel shipments were continuing to decline into the fourth quarter.

Nucor provides a level of financial stability with more than $3 billion in cash on the balance sheet and a policy of steady dividend payouts. The company has paid a dividend for more than 150 consecutive quarters and expects to continue the trend. The current NUE dividend yield is 3.7 percent.

Recently the analysts at Jefferies & Company reiterated their buy rating on Nucor but lowered their target price by $7 per share. Barclays Capital analysts recently initiated coverage on the stock with an equal weight rating.

The company reports next on Jan. 19.

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Steel producer Nucor Corp. (NUE) is the largest steel producer in North America and produces a diversified mix of products. For 2011, the company has experienced significantly increasing profits, but economic conditions make future growth uncertain. Nucor produces iron and...
Nucor,profits,growth,NUE
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2011-01-28
Monday, 28 Nov 2011 02:01 PM
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