NUE outpaces expectations, can it break above $180?

Nucor Corporation (NUE), a leading U.S. steel producer, released its fourth-quarter earnings report for 2023. The company surpassed both earnings per share (EPS) and net sales estimates. Nucor's robust performance is driven by its ability to navigate market challenges and capitalize on steel-intensive megatrends. With a positive outlook for the coming year, Nucor aims to bolster its core operations, expand its portfolio of solutions, and enhance shareholder value through capital deployment strategies.

In the fourth quarter of 2023, Nucor reported EPS of $3.16, exceeding the estimated $2.88. Net sales for the quarter stood at $7.70 billion, surpassing the estimated $7.61 billion. Nucor's EBITDA reached $1.36 billion in Q4 and $7.41 billion for the entire year, reinforcing its financial strength.

Nucor experienced a 12% YoY decrease in consolidated net sales to $7.70 billion in Q4 against the projected $7.61 billion. The average sales price per ton declined by 8% during the same period. Although there was a 5% decrease in tons shipped to outside customers, total steel mill shipments increased by 8% compared to the fourth quarter of 2022. Steel mill shipments to internal customers constituted 20% of total steel mill shipments, showing consistency across the quarters. Downstream steel product shipments to outside customers decreased by 11% compared to the third quarter of 2023 and 14% compared to the fourth quarter of 2022. One crucial indicator of operational performance was the average scrap and scrap substitute cost per gross ton, which stood at $397, slightly higher than the estimated $386.52. However, sales tons to outside customers came in slightly lower at 5.93M compared to the estimated 6.01M.

Earnings in the fourth quarter of 2023 were influenced by lower pricing and volumes across all three operating segments. The steel mills segment experienced a significant decline in realized pricing, particularly in its sheet and plate mills. In the steel products segment, earnings declined due to moderating average selling prices and lower volumes. Additionally, the raw materials segment faced decreased earnings due to lower pricing for raw materials and planned outages at the direct reduced iron (DRI) facilities.

Nucor anticipates increased earnings in the first quarter of 2024 compared to Q4 2023. Higher average selling prices and volumes, particularly in sheet mills, are expected to drive earnings growth in the steel mills segment. However, earnings in the steel products segment are forecasted to decrease due to lower average selling prices. The raw materials segment is expected to witness improved profitability in Q1 2024, primarily due to increased profitability in DRI facilities and scrap processing.

In 2024, NUE expects to increase capital deployment with planned capital expenditures of $3.5 billion, continuous evaluation of acquisition opportunities, and share repurchases that are anticipated to outpace the previous year.

Over the past four years, Nucor has consistently generated an average annual return on equity (ROE) of 33%, reflecting its strong performance and commitment to shareholder value. The company has returned approximately $9.7 billion to its shareholders through dividends and share repurchases. With a robust balance sheet and a wide array of sustainable steel solutions, Nucor anticipates leveraging market drivers to foster sustainable growth and maximize shareholder returns.

The weekly chart for Nucor Corporation (NUE) displays a bullish trend with the stock price consistently closing above both the 20-week and 50-week moving averages, which is a positive indicator. The stock shows higher lows indicating an upward trend. The $180 level appears to act as a resistance area, meaning the stock has peaked near this price point several times, but has not consistently broken through it to establish a new range above this level. The resistance zone signifies a price level where selling pressure is historically strong. The Relative Strength Index (RSI) is around 60, which is on the higher side but still below the overbought threshold of 70, suggesting there is still room for upward movement before the stock might be considered overbought. Overall, the technical indicators on the chart suggest a bullish stance but also highlight the importance of the $180 resistance level, where the stock might face selling pressures based on past patterns.

Please note that this article is designed to provide an analysis based on the provided information and does not constitute a financial recommendation. Investors should conduct further research and analysis before making any investment decisions in Nucor Corporation (NUE).