Nucor Stock Drops as Lower Selling Prices Weigh on Steelmaker’s Results and Outlook

Shares in Nucor (NUE) slumped more than 6% ahead of the opening bell Tuesday after the steel producer missed Wall Street’s quarterly estimates and issued a weaker-than-expected current-quarter outlook amid lower selling prices.

The Charlotte, North Carolina-based steelmaker posted first-quarter earnings of $3.46 per share, below analysts’ forecast of $3.64 a share. Revenue in the period of $8.14 billion contracted 7% from the prior year’s corresponding quarter and came in short of the $8.26 billion consensus view, in part, due to the company’s steel products unit reporting a 15% year-over-year (YOY) fall in shipments coupled with lower average selling prices.

Looking ahead, the company sees the bottom line declining on a sequential basis in the current quarter due to ongoing lower average selling prices weighing on its steel mills segment.

“We expect earnings in the second quarter of 2024 to decrease compared to the first quarter of 2024. The largest driver for the expected decrease in earnings in the second quarter of 2024 is the decreased earnings of the steel mills segment, primarily due to lower average selling prices partially offset by modestly increased volumes,” the company cautioned in its earnings release.

In a bright spot, the steel producer expects current-quarter earnings in its raw materials division to receive a boost from the company’s reduced iron facilities and scrap processing operations.

The company also highlighted its recent acquisition of data center infrastructure maker Southwest Data Products, saying the $115 million deal broadens its capabilities in the rapidly growing data center market.

After climbing to a new all-time high (ATH) of $203 earlier this month, the Nucor share price has retraced in recent weeks to the 50-day moving average. During today’s projected earning’s-driven sell-off, investors should monitor if the stock can hold above the key $179 level, an area on the chart that finds a confluence of support from a multi-month horizontal line and the 38.2% Fibonacci retracement level. A breakdown below this crucial region could see lower support tested around $171.

Nucor shares were down 6.5% at $179.25 about three hours before Tuesday’s opening bell. Through Monday’s close, the stock had gained about 24% over the past year.

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As of the date this article was written, the author does not own any of the above securities.