Wednesday, September 17, 2008

Earnings Target Rises for Nucor

September 16th Wallstreet Journal:

Nucor Corp. raised its third-quarter earnings target, citing improved performance -- including from recent acquisitions -- and a lower-than-expected accounting charge because of a significant decline in scrap prices.
The maker of steel from recycled metal now expects earnings of $2.15 to $2.20 a share. In July, the company forecast $1.80 to $1.85 a share, below Wall Street's then-estimates. Analysts' latest estimate was $1.93, according to a poll by Thomson Reuters. Year-earlier earnings were $1.29 a share.

Recent acquisitions made by Nucor include this year's $1.44 billion purchase of SHV North America, owner of North America's largest scrap purchaser and Nucor's broker of ferrous scrap.

In March 2007, Nucor acquired Harris Steel Group Inc. Those additions more than doubled Nucor's steel products' annual capacity.

Generally, a run-up in steel prices this year is offsetting record-high iron-ore costs and skyrocketing energy costs.

1 comment:

DM Smith said...

A general comment not related to Nucor:

In addition to finding new stocks, let's keep a keen eye on the current portfolio as well, always evaluating whether we should (1) add to our current position, (2) sell part of it, (3) sell all of it, or (4) stay put. The UASBIG is under some pressure right now to populate its portfolio with more names, as are all such groups at this stage of development. Still, we should not hesitate to take a step or two backward (by going from 9 stocks to fewer) if that's warranted.

I'm not saying we should take action because the market's (and the portfolio value's) down. In *all* market environments we need to regularly, explicitly, reaffirm that our current positions are still a good idea. This is as important as finding promising new stocks. We need to think about our current stocks as though we'd not yet bought them -- would we still buy them today, at the curernt price, if making the decision again? There is no room for either inertia (we own it so let's keep it), panic (it's down sharply and that alone means we should sell), or backward gazing (we bought it at 50 so let's wait until it returns to at least 50) in making this decision in a a level-headed way.

Going forward, deciding on a sell discipline plan -- whether for the overall portfolio or stock by stock -- is a good idea for our group.

Almost every investor is having a tough time in this market. Most portfolios run by professionals are way down in value, money market funds are freezing up, and hedge funds are liquidating. Keep a clear head and focus on the long-term fundamentals and you'll be fine. Keep up the good work!