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Shares of Nucor Corp. sank Friday, after the steelmaker warned investors that earnings for the current quarter will fall short of expectations.
The stock
NUE,
dropped 5.5% in afternoon trading, putting it on track to close at a three-month low. The stock was among the S&P 500 index’s
SPX
worst performers on Friday, and helped drag down the shares of rival steelmakers.
“We expect earnings for the steel mills segment to decline in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to lower pricing, and to a lesser extent, volumes,” the company said in a statement released late Thursday. “The largest impact on earnings is expected to occur at our sheet mills.”
In July, during the company’s conference call that followed the release of second-quarter results, the company had said that steel mill earnings were expected to decline in the third quarter, as lower margins offset “stable” shipments.
The company expects third-quarter earnings per share of $4.10 to $4.20, below the sequential second quarter’s EPS of $5.81 and down from EPS of $6.50 in last year’s third quarter.
The current FactSet EPS consensus is $4.43, which has been lowered from the EPS consensus of $4.61 at the end of August.
Nucor is projected to report third-quarter results in late October.
Nucor’s profit warning also weighed on its peers. Shares of Steel Dynamics Inc.
STLD,
slid 2.9% and U.S. Steel Corp.’s stock
X,
fell 0.4%.
J.P. Morgan analyst William Peterson reiterated his underweight rating on the stock, amid concerns over the fourth-quarter outlook.
He said that while Nucor is one of the highest-quality companies in the steel space, his bearish rating reflects a view of weakness in its largest end market in nonresidential.
“Into 4Q we anticipate further downward momentum in sheet pricing,” Peterson wrote in a note to clients, with market pricing largely a function of how long the United Auto Workers’ strike against the Big 3 automakers lasts.
The automotive sector is one of Nucor’s key customers.
Nucor’s stock has gained 3.5% over the past three months while the S&P 500 has edged up 0.65.
