For Immediate Release
Chicago, IL – March 18, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Nucor Corporation (NUE), United States Steel Corporation (X), ArcelorMittal (MT), Commercial Metals Company (CMC) and FactSet Research (FDS).
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Here are highlights from Wednesday’s Analyst Blog:
Nucor Guides Up, Our Rec Follows
Nucor Corporation (NUE) provided its first quarter 2010 earnings update, indicating it expected earnings per share to be in the range of a loss of 5 cents to earnings of 5 cents per share. The Zacks Consensus Estimate is pegged at net earnings of 2 cents in the first quarter. Nucor had reported a loss of 60 cents in the first quarter of 2008.
Nucor’s guidance is driven by higher expected operating rates at its beam and bar mills. The company is anticipating operating rates of 55% and 63% at its beam and bar mills, respectively, in the first quarter, up from 11% and 10% in the previous quarter. Nucor also foresees 85% and 90% utilization at its sheet and plate mills, up 22% each from prior quarter levels.
With improved utilization rates, Nucor expects production to climb 51% in the first quarter. Shipments are expected to be up 49%. The company’s scrap business under the Raw Material segment also showed significant improvement in the last reported quarter.
However, Nucor continues to see weakness in the residential and non-residential construction markets, with little sign of strength.
Recommendation Upgrade
We are upgrading Nucor from Underperform to Neutral. With operating rates up near peak levels on the beam product side and bar product operating rates also creeping higher, we believe that Nucor is well positioned to benefit from the ongoing recovery in steel fundamentals.
However, we remain wary of the company’s high long products exposure relative to others in the sector, including United States Steel Corporation (X), ArcelorMittal (MT) and Commercial Metals Company (CMC). We think it could be challenging for Nucor and other long products players to push through scrap surcharges on long products as end demand remains weak. The company’s relatively high construction exposure and lower leverage to improving steel prices is also a concern.
Nonetheless, we believe Nucor is well positioned with a good pipeline of organic investments and a very strong liquidity position.
Factset Revenue Grows, EPS Beats
FactSet Research (FDS) reported EPS for the quarter of 75 cents, exceeding the Zacks Consensus Estimate of 74 cents.
The company reported revenue for the second quarter of $157.3 million, up 0.5% from $156.5 million reported in the year-ago quarter. The company is witnessing some benefits from investments made during the downturn, as well as the highest quarterly user growth in two years.
Geographically, revenues from the U.S. were $106.8 million, flat compared to the year- ago quarter, while non-U.S. revenues increased 1.3% to $50.5 million.
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