Steel Dynamics Beats; Nucor and Cleveland-Cliffs on tap amid advanced steel price fears – .

Steel Dynamics Beats; Nucor and Cleveland-Cliffs on tap amid advanced steel price fears – .

Steel dynamics (STLD) released better-than-expected third-quarter results on Monday evening, marking the start of an important week for steel stock earnings. STLD shares rose in extended trading.


Nucor (NUE) winnings are due Thursday afternoon and Cleveland Cliffs (CLF) reports early Friday. Record profits are expected at all levels.
The week started off on a downward trend as Morgan Stanley lowered its price target for STLD, NUE and CLF stocks, as well as American steel (X).

Analyst Carlos De Alba says he expects investor worries about spike in steel prices to weigh on steel stocks, which defeats any rally in the near term. De Alba downgraded the STLD share to an equal weight to the overweight, reducing its price target to 61 from 77. The NUE share price target increased from 115 to 105 and CLF’s target from 26 to 21.

Meanwhile, Morgan Stanley reduced US Steel from overweight to underweight and lowered its target for the X share price from 35 to 17. In addition to concerns about price spikes, De Alba noted the big plans of US Steel spending. US Steel profits will follow on October 29.

So is Morgan Stanley too bearish? This week’s earnings reports will help Wall Street gauge how long the good times can last.

Gains de Steel Dynamics

Steel Dynamics profits exploded to $ 4.95 from 51 cents a year ago, according to Zacks Investment Research. Revenue more than doubled to $ 4.99 billion.

Steel Dynamics earnings rose to $ 4.96 a share, just beating views. However, another consensus forecast had EPS at $ 4.57, which STLD comfortably beat. Revenue jumped 118.5% to $ 5.09 billion.

“We continue to see strong demand for steel coupled with moderate but still historically low customer inventories throughout the supply chain,” CEO Mark Millett said in a statement. “We believe that this momentum will continue and that our consolidated fourth quarter results could represent another record performance. “

STLD share rose nearly 2% in extended trading.

NUE, CLF Revenue estimates

Nucor is expected to earn $ 7.21 per share, up more than 900% from 63 cents a year ago, as revenues double to $ 10.10 billion.

Cleveland-Cliffs earnings per share are also expected to be off the charts, although this is in part because results from a year ago did not reflect its purchase of ArcelorMittal‘s (MT) in the United States. This agreement was concluded in December. CLF profits are expected to rise to $ 2.22 per share from 4 cents a year ago. Revenue was up 240% to $ 5.65 billion.

Steel stocks: STLD, NUE, CLF, X

Despite Morgan Stanley’s bearish call, steel stocks retreated from their lows on Monday. STLD stock rose 0.9% to 62.42, after trading as low as 59.30. After office hours, STLD stock rose 1.7% to 63.50.

During the regular session, Nucor climbed 0.7% and CLF stock fell 0.4%. X share, although far from its lows, still lost 1.2%.

From a broader perspective, the four steel stocks have all lost momentum after the big comebacks of last year. But they try to climb even higher.

On a positive note, shares of Steel Dynamics, Cleveland-Cliffs and Nucor closed above their 21-day moving averages and are arguably breaking trendlines. But they’re all below their 50-day moving averages.

A move by STLD, NUE and CLF above their 50-day lines, however, could offer early entry.

The X share, meanwhile, is not only below its 50 day line, but also its 21 and 200 day lines.

In the overnight action, NUE and Cleveland-Cliffs shares rose a fraction after Steel Dynamics earnings. American steel has sagged.

Be sure to read IBD’s The Big Picture column every day to stay on top of the dominant market trend and make sure that growth stock investors always have the green light to buy quality stocks in the range. purchase.

Steel outlook

The increase in supply will be a concern to watch. Steel Dynamics is nearing completion of its flat-cylinder steel plant in Sinton, Texas, and production is expected to start before the end of the year. The company expects the plant to ship up to 2.2 million tonnes next year.

Longer-term, Nucor announced plans in September for a $ 100 million bar mill expansion, adding 600,000 tonnes of capacity. Nucor also announced the construction of a $ 2.7 billion plate plant with a capacity of 3 million tonnes. Meanwhile, US Steel is looking to build a $ 3 billion, 3 million tonne mini-steel plant.

However, there are plenty of bright spots in the demand outlook, including the bipartisan infrastructure bill with around $ 550 billion in additional spending planned. In Nucor’s second quarter earnings call on July 22, CEO Leon Topalian said the infrastructure bill is expected to increase demand for steel “by up to 5 million tonnes per year for every 100 billion new investment dollars ”.

Other strengths include meager inventory throughout the supply chain, with automakers having to replenish “insanely low” inventories, he said.

Rising oil prices could also stimulate demand in the oil sector which has been a drag throughout the pandemic.


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