Nucor Corp (NUE, Financial) experienced a daily loss of -6.11%, with a 3-month gain of 3.21% and an Earnings Per Share (EPS) of 21.65. These figures prompt an intriguing question: is the stock fairly valued? This article provides a comprehensive valuation analysis of Nucor, offering insights into its financial health and future prospects. Read on to discover the intrinsic value of this prominent steel manufacturer.
An Overview of Nucor Corp (NUE, Financial)
Nucor Corp is a leading manufacturer of steel and steel products. It also produces direct reduced iron for use in its steel mills. The company operates international trading and sales companies that buy and sell steel and steel products manufactured by Nucor and others. The operating business segments include steel mills, steel products, and raw materials, with the steel mills segment generating maximum revenue. Nucor's offerings range from carbon and alloy steel in sheet, bars, structural and plate; steel trading businesses; rebar distribution businesses; and equity method investments in NuMit and NJSM.
Understanding the GF Value
The GF Value is a proprietary measure of a stock's intrinsic value. It's calculated based on historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future estimates of business performance. The GF Value Line on our summary page provides a snapshot of the fair value at which the stock should ideally trade.
According to the GF Value, Nucor (NUE, Financial) appears to be fairly valued. At its current price of $155.42 per share, Nucor has a market cap of $38.70 billion. Because Nucor is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
Financial Strength of Nucor
Investing in companies with poor financial strength carries a higher risk of permanent loss of capital. Therefore, it's crucial to carefully review a company's financial strength before deciding to buy its stock. Nucor has a cash-to-debt ratio of 0.81, which is better than 66.1% of 593 companies in the Steel industry. GuruFocus ranks Nucor's overall financial strength at 8 out of 10, indicating strong financial health.
Profitability and Growth of Nucor
Investing in profitable companies, especially those that have demonstrated consistent profitability over the long term, poses less risk. Nucor has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $37.50 billion and Earnings Per Share (EPS) of $21.65. Its operating margin is 20.52%, which ranks better than 92.95% of 596 companies in the Steel industry. Overall, GuruFocus ranks Nucor's profitability at 9 out of 10, indicating strong profitability.
Growth is probably the most important factor in the valuation of a company. A faster-growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Nucor is 28.7%, which ranks better than 86.71% of 587 companies in the Steel industry. The 3-year average EBITDA growth rate is 70.9%, which ranks better than 89.02% of 510 companies in the Steel industry.
ROIC vs WACC
Another method of determining the profitability of a company is to compare its return on invested capital (ROIC) to the weighted average cost of capital (WACC). When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Nucor's ROIC is 25.1, and its cost of capital is 13.83.
Conclusion
In conclusion, Nucor (NUE, Financial) appears to be fairly valued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 89.02% of 510 companies in the Steel industry. To learn more about Nucor stock, check out its 30-Year Financials here.
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