The hot steel sector churned out more/another earnings beat early Thursday. Cleveland-Cliffs beat first-quarter earnings estimates. Nucor earnings and revenue fell short.
Cleveland-Cliffs, which had just updated its full-year earnings outlook on March 30, raised guidance as it benefits from what analysts are calling an unprecedented steel price squeeze. CLF stock, part of the elite IBD 50 stock list, rose in early stock-market action.
Nucor had guided higher in a March 16 update.
NUE stock, which is near a buy point, nudged higher before the opening bell. STLD stock held near a buy point after Steel Dynamics’ Q1 earnings topped estimates late Monday.
Estimates: Analysts forecast Cleveland-Cliffs earnings of 33 cents vs. 4 cents a year ago, according to Zacks Investment Research. Year-ago figures don’t reflect Cleveland-Cliffs’ transformative acquisition of ArcelorMittal’s U.S. operations in a deal that closed in December. Revenue was seen rising to $3.82 billion vs. $359 million pre-merger.
Results: Cleveland-Cliffs posted Q1 earnings of 35 cents on revenue of $4 billion. While beating Zacks forecasts, that missed some other consensus estimates.
Outlook: Management raised 2021 guidance for adjusted EBITDA $4 billion, up from March 30 guidance of $3.5 billion. It now assumes the hot-rolled coil steel price averages $1,100 per net ton for the rest of the year, up from old forecast of $975.
CLF stock rose 2% to 17.40 in early Thursday action. On Wednesday, CLF stock found support at its 50-day moving average, falling as low as 15.84, before closing at 17.05, up 2.7% on the session.
On March 31, following an update to Cleveland-Cliffs’ earnings outlook, CLF stock surged past a 17.88 buy point, 10 cents above its March 18 handle high. CLF stock was featured as the IBD Stock Of The Day on March 31. The write-up noted that CLF stock had become extended, rising past the 5% chase zone.
A 24% shakeout after CLF stock’s 300% rise off its July lows isn’t surprising, and the bounce above its 50-day average looks constructive. However, the volatility means the recent buy point is no longer applicable.
Estimates: Analysts expect Nucor earnings per share of $3.14, up 217% from a year ago. Revenue is seen rising 33% to $7.47 billion.
Results: EPS of $3.10 on revenue of $7.02 billion.
Outlook: Nucor said Q2 earnings will top Q1’s. Ahead of the Q1 report, analysts expected Nucor earnings per share of $3.29 for Q2 and $9.05 for all of 2021.
NUE stock fell 0.7% to 79.60 in early Thursday action. Shares closed at 80.18 on Wednesday, about 3% below a 82.86 buy point from a 4-weeks-tight pattern.
That’s an extra week to a more traditional, yet still fairly uncommon, 3-weeks-tight pattern. That can offer an entry point, or a chance to add shares, after a leading stock has broken above a proper buy point, then pauses while holding fast to its gains.
IBD generally suggests that investors who establish a position on the original breakout only add a fraction of the original position on a breakout from a 3-weeks-tight pattern.
STLD stock also has etched out a similar 4-weeks-tight pattern with a 52.69 buy point. On Thursday, STLD stock was flat at 51.20.
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