Nucor, Steel Dynamics Could Disappoint: Analyst
NEW YORK (TheStreet) - Investors might have a surprise coming in the fourth quarter from steel companies Nucor (NUE) and Steel Dynamics (STLD), but it won't be a good one, according to Morgan Stanley.
The firm expects that both companies could offer up weaker than expected forecasts for the fiscal fourth quarter, likely within the next two weeks because of soft margins.
Recent steel price hikes seem to be sticking, Morgan Stanley said, but because Nucor and Steel Dynamics both price on a lag, they won't see any benefit.
"Although the market is now into its third round of price hikes, we believe these recent price improvements will not translate into better 4Q metal margins for NUE and STLD," the firm wrote. "Both companies price their products on a lag, so price changes will not have a major impact until next quarter. We see metal margins falling by $48/t for NUE and $47/t for STLD."
Morgan Stanley said it sees fourth-quarter earnings of 21 cents a share for Nucor and a profit of 10 cents a share for Steel Dynamics vs. the current consensus views of 42 cents and 18 cents respectively. Shares of Nucor closed Monday's regular session at $39.84, down 2%, while Steel Dynamics' stock finished at $12.77, off 3.6%. --Written by Alexandra Zendrian in New York.>To contact the writer of this article, click here: Alexandra Zendrian >To submit a news tip, send an email to: tips@thestreet.com. >To follow the writer on Twitter, go to Alexandra Zendrian.
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