Steel and related products producer Nucor Corporation (NYSE: NUE) has posted better-than-expected first-quarter results on the back of growth witnessed in net sales.
Shares of the company rose 3.8% on Thursday. The stock, however, pared its gains marginally to close at $175.45 in the extended trading session.
Revenue & Earnings
Nucor reported quarterly net sales of $10.49 billion, up 50% from the same quarter last year. Further, the figure surpassed the consensus estimate of $10.48 billion by a whisker. The rise in net sales was driven by the year-over-year growth of 68% witnessed in average sales price per ton.
Earnings per share (EPS) for the quarter rose 147.4% year-over-year to $7.67 and outpaced the consensus estimate of $7.29 per share.
Nucor’s total steel mill shipments in the first quarter of 2022 stood at 6,394,000 tons, down 11% from the same quarter last year.
The operating rates at the company’s mills also witnessed a decline from the previous year’s figure of 95% to 77%.
Liquidity Position & Share Repurchases
Nucor ended the quarter with $4.26 billion in cash and cash equivalents and an undrawn revolving credit facility of $1.75 billion.
In the first quarter of 2022, Nucor repurchased approximately 7 million shares of its common stock at an average price of $128.45 per share.
Management Commentary
The CEO of Nucor, Leon Topalian, said, “I’m incredibly proud of the Nucor Team’s exceptional focus on delivering world class performance in the first quarter of 2022, especially our record results in Safety and first quarter profitability.
“Our key forward looking indicators for 2022 remain favorable and we expect another strong year in both earnings and cash generation.”
Stock Rating
Consensus among analysts is a Hold based on six Holds and one Sell. NUE’s average price target of $121.29 implies downside potential of 30.9% from current levels. Shares have gained 130.8% over the past year.
Conclusion
Nucor’s robust quarterly results give it a solid footing to benefit from the economic tailwinds in the form of rising commodity prices to further enhance its profitability in the near future. However, the company’s decreasing operating rates can be a cause of concern.
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