Nucor Up on Brighter Economic News

Shares of steelmaker Nucor have returned to positive territory after a dip in the red following cautiously optimistic first-quarter guidance.
By Andrea Tse ,

NEW YORK (

TheStreet

) -- Shares of steelmaker

Nucor

(NUE) - Get Report

returned to positive territory after a dip into the red Thursday after the company warned Wall Street to expect a loss in the fourth quarter.

But the company also said it was "cautiously optimistic" about the prospects for business in the first period next year.

For the fourth quarter ending Dec. 31, Nucor forecast a loss of 10 cents to 15 cents a share against earnings of 18 cents a share a year ago. In the third period, Nucor posted a profit of 7 cents a share. Residential and non-residential construction markets show continue to show "little, if any, strength," the company said.

The guidance is below the consensus Wall Street target of 4 cents a share in fourth-quarter profit.

Nucor warned of significant increases in the price of scrap metal, the steelmaker's most important feedstock. The company expects raw material costs to continue rising through the winter months.

Like other U.S. steel mills, Nucor has been lifting prices "significantly" in recent weeks. But any benefits from those increases won't be realized until the first quarter, the company said.

"We are therefore cautiously optimistic regarding first-quarter volume and pricing," the company said in its press release.

Nucor added that it's operating efficiencies have been improving, so even with the seasonal year-end wind-down of operations by its customers, shipments would only be slightly lower than they were in the third quarter.

Shares of Nucor were gaining 1.5% to $44.01 after dipping as low as $42.40 earlier in the session as investors digested the guidance.

About 6.6 million shares of Nucor have been trading hands early Thursday afternoon, compared with the usual daily churn of about 4.3 million.

Stocks overall advanced Thursday on a surprise decline in initial jobless claims and strong manufacturing activity in the Philadelphia region.

Nucor peers such as

Steel Dynamics

(STLD) - Get Report

and

AK Steel

(AKS) - Get Report

saw their shares gain 3.2% to $17.59 and 4.9% to $15.12, respectively, on the promising domestic economic news.

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-- Written by Andrea Tse in New York.

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