Nucor Corporation - Momentum

Nucor Corporation’s (NUE) share price is up 21% in the last four months as profitability has improved in each month of the new year. With Steel prices on the upswing and a bullish 41% growth projection, this Zacks #1 rank stock is fabricating momentum.

Company Description

Nucor Corp, through its subsidiaries, manufactures and sells steel products in the United States and internationally. The company was founded in 1940 and has a market cap of $14 billion.

Although NUE has seen its fair share of volatility over the last 12 months, shares have been trading strong since early December as steel demand begins to improve. That led the company to provide guidance on its Q1 results set to hit the wire on April 2.

First-Quarter Guidance

Nucor expects earnings to come in between 30 and 35 cents per share, a huge gain from last year’s 10 cents and last quarter’s loss of 4 cents. Analysts had been looking for earnings of 30 cents.

The company noted that the strong results were a product of demand improvement in its end markets and higher steel prices. But even though the tone was optimistic, Nucor did note that it continues to see weakness in both residential and non-residential construction, tempering expectations for a return to the booming steel market we saw from 2006 to 2008.

Estimates

We’ve seen some pretty decent movement in estimates over the last few months, with the current year up 46 cents to $2.76. The next-year estimate is also up 46 cents to $3.91, a bullish 42% growth projection.

Valuation

But in spite of the gains, the valuation picture looks compelling, with a PEG ratio (PE/Growth) of .39, well below the benchmark of 1 for value.

12-Month Chart

On the chart, NUE has been strong since gaining traction in early December, hitting a new 52-week high at $49.24 in mid February. Shares have pulled back a bit since then on general market volatility but increased steel demand and a solid valuation should support shares. Take a look below.