Commercial Metals reported strong quarterly earnings Thursday, while Steel Dynamics and U.S. Steel guided higher on their June-ending quarters.
CMC stock reversed solid morning gains to close loser Thursday amid a fierce market sell-off on recession fears. If the economy slumps, steel demand and pricing could weaken considerably.
STLD stock also retreated Thursday to a key support level. U.S. Steel stock, which slumped Thursday with its peers, rallied overnight on its after-hours Q2 update. But X stock has plunged over the past few months.
Earlier in the week, Nucor, a larger rival to Steel Dynamics and U.S. Steel, also gave bullish preliminary guidance.
Commercial Metals Earnings
Irving, Texas-based Commercial Metals is a scrap recycler, channeling that material into its growing fleet of electric-arc furnace steelmaking operations. That vertical integration cuts the raw materials costs for its steelmaking processes. CMC produces rebar and long-rolled products.
Commercial Metals earnings leapt 151% vs. a year earlier to $2.61 a share. That excludes costs related to its acquisition of Tensar. That easily beat analyst views for EPS of $1.99.
Revenue climbed 36% to $2.52 billion, topping forecasts for $2.4 billion.
North America EBITDA rose 83% amid record margins on steel products and raw materials, which have seen five consecutive quarters of year-over-year margin expansion.
CMC also saw stronger margins in its European segment as sanctions against Russia and Belarus constrained supply and increased demand.
CEO Barbara Smith predicts the company's solid performance will continue into the fourth quarter and into 2023, based on their backlog and rising demand for construction projects.
CMC stock rose 2% after the market open on Friday to trade around $36.20. It's currently teetering around the 200-day line and just above CMC stock's mid-May low of $35.28.
STLD: More Solid Steel Outlook
Fort Wayne, Ind.-based Steel Dynamics updated its second quarter earnings guidance on Thursday to $6.61-$6.65 adjusted. That's well above views.
In Q1, EPS leapt 187% to $6.02 a share, with revenue up 57% to $5.57 billion.
STLD says profits from steel operations will fall vs. Q1 due to lower earnings from rolled steel operations. Still, STLD is seeing strong demand, increases in prices and expects a record number of shipments for its long-product steel.
The company says its metal recycling earnings will be higher than in Q1, due to increased shipments and pricing. STLD's fabrication operations are also expected to be more profitable. Its record number of shipments and boosts to sales values offset higher production costs.
Steel Dynamics has repurchased $397 million of its stock through June 10 this year, based on its earnings outlook and cash-flow generation. STLD stock opened up 2.5% on Friday at $71.64, slightly above its 200-day line.
X Marks The Spot
U.S. Steel sees adjusted EPS of $3.83-$3.88 per diluted share. The Pittsburgh steelmaker projects a record $1.6 billion in EBITDA. The results would be well above analysts' predictions of $3.29 in EPS and $1.48 billion in EBITDA and EPS of $3.29.
X stock shed $5 off its share price last week. On Thursday, U.S. Steel stock was down 50% from its April 1 peak at $19.58. It's clawed back some of those losses at market open Friday. X rose 3.2% during early trading hours to $20.20, but still well below moving averages.
"We expect to continue delivering record performance in the second quarter, with each business segment meaningfully contributing to profitability," CEO David B. Burritt said in the announcement. Burritt says the steelmaker has been driven by strong demand across its customer base, the resurging energy market and realization of increased price contracts.
The company's strategic projects are pre-funded and it currently has nearly $3 billion in cash. Over the quarter, U.S. Steel repurchased $320 million worth of shares. As of June 16, it has $210 million remaining in its $800 million stock buyback program.
New Records For NUE
Charlotte-based Nucor is one-upping itself. On Wednesday, the company updated its EPS guidance to range from $8.75 to $8.85 per share. That tops its previous record earnings of $7.97 per share from Q4 2021. Analysts were projecting NUE to report EPS of $8.11 for the period, according to FactSet.
NUE says demand for nonresidential construction, increased profitability of its mills and steel products and higher selling prices for raw materials were the main drivers for its earnings.
"End use market demand remains strong for steel and steel products, and we remain confident that 2022 will be another year of very strong earnings and cash flow for Nucor," the company said in its announcement.
NUE stock rose slightly following the news on Wednesday, but hit resistance at the 200-day line. Shares are trading around $113.50 as of Friday morning, just 1% above their lowest level since late February.
