Valued at a market cap of $33.5 billion, Nucor Corporation (NUE) engages in the manufacturing and selling of steel and steel products. The Charlotte, North Carolina-based company is a leading producer of structural steel, steel bars, steel joists, and steel decks, and also manufactures direct reduced iron (DRI).
Companies worth more than $10 billion or more are generally described as “large-cap stocks” and Nucor Corporation fits right into that category. The company distinguishes itself as the largest steel producer in the United States currently operating 23 manufacturing plants and is renowned for its high quality, wide variety of steel products and its innovative technologies for recycling scrap into steel.
Shares of NUE have slipped 32% from its 52-week high of $203, achieved on Apr. 9. The steel producer has declined 11.2% over the past three months, lagging behind the broader Nasdaq Composite’s ($NASX) 1.6% drop over the same time frame.
Moreover, NUE stock is down 20.7% on a YTD basis in the longer term, significantly lagging behind NASX’s 13.7% gains. Shares of NUE have declined 15.4% over the past 52 weeks, compared to NASX’s 22.7% return over the same time frame.
NUE has been trading below its 200-day moving average since June and has remained mostly below its 50-day moving average since May, indicating a bearish trend.
Nucor has underperformed due to challenges in the steel industry, reflected by a significant decline in U.S. steel prices caused by a combination of demand slowdown and oversupply. However, despite a sluggish Q3 earnings outlook, the stock recovered marginally on Jul. 22 after its better-than-expected Q2 earnings release driven by a rise in raw materials segment earnings. Moreover, the company’s strategy to grow its core steelmaking operations, diversify into the soft steel market,1 and continue developments in automation and AI, has positioned it to create attractive shareholder value.
NUE’s underperformance becomes more evident compared to its rival, Steel Dynamics, Inc.’s (STLD) 9% decline on a YTD basis and 7.1% gain over the past 52 weeks.
Despite NUE’s underperformance relative to the broader market, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 12 analysts covering the stock, and the mean price target of $184.89 suggests a premium of 32.4% to its current levels.
On the date of publication, Sohini Mondal 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.
