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Quick, name one thing you learned about sports as a child. Chances are, whether it was a parent or a coach, someone conditioned you to keep your eye on the ball.
Although I missed my share of volleys on the tennis court, I will not for one moment take my eyes off the bellwether stocks of global industry. I continue to encourage every Fool to do the same throughout this complex crisis.
Amid a flurry of earnings reports out this week, scrappy steelmaker Nucor (NYSE: NUE ) has kept its furnace burning. Despite a 71% drop in fourth-quarter earnings from the prior year, and a telling 86% slide from an impressive third quarter, Nucor managed to earn a tidy profit of $105.9 million through one of the most challenging reversals the industry has ever seen.
Rewarding this resilience, buyers carried the company's stock to an intraday, double-digit percent gain on Wednesday. Smaller competitors Steel Dynamics (Nasdaq: STLD ) and Schnitzer Steel (Nasdaq: SCHN ) have come along for the ride, despite posting fourth-quarter losses of $82.7 million and $34 million, respectively.
When it comes to keeping his eye on the ball, Nucor CEO Dan DiMicco is the Joe DiMaggio of industry executives. Over the past several years, DiMicco has built the company into America's second-largest steelmaker and North America's largest metals recycler. Don't expect this CEO to exit out the back door like POSCO (NYSE: PKX ) leader Lee Ku-taek. As we watch Nucor adapt to the unprecedented challenges now unfolding, the secrets to DiMicco's success are evident.
While participating in the deep production cuts that have shrunk the industry to less than 50% of capacity utilization, Nucor has thus far maintained a no-layoffs policy. As competitors like ArcelorMittal (NYSE: MT ) and U.S. Steel (NYSE: X ) have closed entire mills and trimmed their labor forces, Nucor stands at the ready to resume greater production levels the moment orders begin to file in once more. Because of the company's arc furnace technology and retained labor force, ramping up production will require little more effort than the flick of a switch.
Nucor boasts a massive moat of liquidity that's greater than the company's total debt balance. Recognizing lingering uncertainty, Nucor again declined to offer numerical guidance for the present quarter, and quipped that anyone trying to do so is "kidding themselves.” Don't kid yourself, this steelmaker will likely withstand the storm and see you on the other side.