Headquartered in Charlotte, North Carolina, Nucor Corporation (NUE) is a leading U.S. producer of structural steel, steel bars, and related products. Valued at a market cap of $36.1 billion, it operates primarily in the U.S. and Canada, producing steel sheets, bars, plates, and more through its network of mini-mills. The company has expanded through acquisitions and geographic growth, with most of its operations and customers located in North America.
Shares of NUE have failed to match the broader market's performance over the past year. While the stock has plunged 11.3% over this time frame, the S&P 500 Index ($SPX) has rallied by 26.1%. In 2024, the stock dipped 14.9%, compared to SPX’s 17.2% return on a YTD basis.
Narrowing the focus, NUE has surpassed the VanEck Steel ETF (SLX), which has declined marginally over the past year and dropped 10.5% on a YTD basis.
On Jul. 22, the stock rose marginally after Nucor announced its Q2 earnings. It generated earnings of $645.2 million, or $2.68 per share, exceeding Wall Street's expectations of $2.31 per share. The company also posted revenue of $8.08 billion, surpassing forecasts of $7.61 billion.
Despite its grim price action over the past year, Nucor’s strategy to grow its core steelmaking operations and expand into steel-adjacent downstream markets positions the company to create attractive shareholder value and enhance its through-cycle earnings profile.
For the current fiscal year, ending in December, analysts expect Nucor’s EPS to decline 44.5% year over year to $9.99. Moreover, the company’s earnings surprise history is mixed, exceeding the consensus estimate in three of the last four quarters and missing on one other occasion.
Nucor stock has a consensus “Moderate Buy” rating overall. Out of 12 analysts covering the stock, six recommend a "Strong Buy," one advises “Moderate Buy,” and five suggest a "Hold."
The consensus rating is more bullish than a month ago when five analysts assigned the stock a “Strong Buy.”
On Aug. 15, Morgan Stanley (MS) upgraded Nucor to “Overweight” from “Equal-Weight” with a reduced price target of $176. The firm believes steel prices have bottomed due to a tighter import spread but expects limited price rallies. Given the "capped upside," the upgrade reflects Nucor's undervaluation compared to peers despite anticipated muted demand for flat steel in the second half of 2024.
The mean price target of $184.89 suggests a 24.9% premium from NUE's current price levels. The Street-high price target of $240 suggests an impressive upside potential of 62.1%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
