Nucor Corporation (NUE)
Materiales / Acero
Nucor is the largest steel recycler in North America and the leading domestic supplier in most of its products, trading at 3% below its 52-week high just as earnings have reached the midpoint of the normalized cycle (net margin of 8.0% in the trailing twelve months ended July 4, 2026): at 20× on that recovered earnings, the price leaves no additional margin, and the estimated return is +0% annually.
- Price
- $246.60
- Intrinsic value (5y, base)
- $235
- Total annual return (5y)
- 0.1%
- Status (nominal)
- Preserves value
- Margin of safety
- No margin
The essentials
- Trailing twelve-month revenues (ended July 4, 2026, 8-K of Jul-27-2026) of $36,101M with attributable earnings of $2,884M: the net margin of 8.0% has already reached the disciplined midpoint of the cycle—between the floor of 5.4% in 2025 and the 13.0-18.3% of 2022-2023—sooner than the original projection anticipated. In the second quarter of 2026, revenues grew 23% year-over-year, with average price per ton of mill products rising 10% and shipments up 12%.
- Steel mill utilization rose from 83% in 2025 to 91% in the second quarter of 2026 (88% for the half-year); start-up costs for the new plants fell to $418 million over the trailing twelve months ($228 million in the first half of 2026, 25% less than the prior half-year). The steel mill order backlog rose 57% during 2025 ($2,130 million to $3,350 million), levels the company itself calls historically high.
- Invested capital rose to $26,516M after the three-year run of $8,900M in capex ($9,730M including the strategy's acquisitions), but the return on that capital has already recovered to around 12.8%, within the method's good band (10-15%); investment guidance drops to $2,500M in 2026.
- Valuation is done on earnings at the midpoint of the cycle, which now coincides with actual trailing twelve-month earnings, not inflated current earnings nor 2022 levels: No margin of safety: at this price capital is preserved, but it is not bought below its value.
Intrinsic value — two valuation methods
Total return at 5 years: 0.1%/year = -1.0% appreciation + 1.0% dividend. The target price ($235) is ex-dividend; the $12 in dividends collected over 5 years are added separately.
The methods disagree: one places the value today above the price ($247) and the other below.
Pillars of the analysis
The verdict — today vs 5 years
Today — expensive, no margin of safety: at $247 trades ~23.6% above its value discounted to today (~$199); the expected return does not even reach the risk-free rate (4.5%).
At 5 years — Preserva valor: the target price ($235) plus dividends yield just enough to preserve nominal capital, below the required 4% floor.
The bridge: the return at 5 years falls below the risk-free rate (4.5%) — which is why there is not even a discount to today's value. To require a 15% annual return, it would need to be bought at ~$125.
Thesis
The business
Nucor is the benchmark operator in a tough industry: a homogeneous product, cyclical demand and capital intensity. It does it better than its peers —a flexible cost structure, a balance sheet with the strongest credit ratings in the sector, integration into the input— and that's why it gets through the down part of the cycle with positive earnings where others lose money; the order backlog at historically high levels (+57% year over year at steel mills) supports that the recovery is not just a spot-price reading. But it remains a price taker whose result depends on the spread between steel and scrap and on tariff protection that the company itself describes as reversible.
The valuation
It is valued by earnings multiple on normalized net earnings at the midpoint of the cycle. The projection brings revenues from $36,101M (the TTM ended July 4, 2026) to $44,550M in five years, with net margin sustaining around 8.0-8.3%—the same disciplined midpoint that real earnings have already reached, without extrapolating the additional improvement the company guides for Q3—. At 13 times that earnings, with buyback reducing shares 1.5% per year, the five-year value comes to $235.
The margin of safety
No margin of safety: at this price capital is preserved, but it is not bought below its value. At $247, against a five-year value of $235, the total estimated return is +0% annually including a dividend yield of 0.9%. The adverse scenario—tariff relaxation, prices at the floor and utilization flat—leaves value well below current price, and the favorable case requires the high cycle to sustain five years straight. The asymmetry is not in the buyer's favor at this price.
What to watch
Five things, in order. The spread between the price of steel and the cost of scrap, which is the driver of the margin. The durability and scope of the Section 232 tariffs, the variable the domestic price floor depends on. The effective contribution of the new plants: the West Virginia flat-rolled plant alone is now estimated at approximately $4,000M —above the original estimate, due to higher labor, materials, and equipment costs— and the $496M of 2025 start-up expenses must turn into earnings as the plants ramp up to run-rate; if they don't, the $8,900M of capital investment over the three-year period ($9,730M including the acquisitions that make up the goodwill below) will have been capital without a return. The steel products segment's goodwill ($2,825M, 66% of the consolidated total), which PwC flagged as a critical audit matter on a specific reporting unit: no impairment charge to date —management itself estimates that a 50-basis-point increase in the discount rate would not trigger one— while still acknowledging that the performance of certain businesses within its reporting units requires continued improvement. And the leadership transition underway: Topalian gave up the President title in December 2025 and Stephen Laxton —CFO since 2022— became President and Chief Operating Officer in January 2026, succeeding David Sumoski; worth watching whether capital allocation discipline holds up under the new division of roles.
Educational / informational. Does not constitute investment advice.