Last Update 13 Nov 25
Fair value Increased 0.80%NUE: Shares Will Benefit From Continued Share Repurchases And Tariff Trends
Nucor's analyst price target increased modestly from $166.08 to $167.42 per share, as analysts adjusted their estimates following recent company commentary and updated forecasts.
Analyst Commentary
Analysts have recently updated their perspectives on Nucor following the company's financial disclosures and updated forecasts. These assessments reflect both optimism and caution as the firm navigates near-term industry dynamics and its execution strategy.
Bullish Takeaways
- Bullish analysts have raised their price targets, highlighting confidence in Nucor's ability to deliver on growth forecasts and improve profitability.
- The company's proactive communication and updated guidance following recent earnings provided clarity and prompted positive valuation adjustments.
- Strong execution and the ability to incorporate new pricing assumptions into forecasts reflect underlying operational resilience.
- Maintaining positive ratings while raising targets signals belief in Nucor's ongoing capacity to generate shareholder value despite evolving market conditions.
Bearish Takeaways
- Some analysts remain cautious due to uncertainties surrounding future steel demand and the potential for market volatility.
- Recent price target increases, while positive, were relatively modest and indicate tempered expectations regarding upside potential.
- Market reaction to previous company updates, including notable stock declines after negative pre-announcements, underscores lingering concerns about execution risks in a cyclical industry.
What's in the News
- Canada plans to drop many U.S. tariffs but is likely to keep 25% import taxes on U.S. steel and aluminum, directly impacting companies such as Nucor (Bloomberg).
- The Trump administration has expanded steel and aluminum tariffs by adding 407 derivative product codes, which increases import costs for companies like Nucor (Reuters).
- Nucor issued guidance for both the third and fourth quarters of 2025, projecting lower earnings and decreased total volumes due to seasonal effects, fewer shipping days, and facility outages.
- The company completed a share repurchase tranche, buying back 700,000 shares for $98.32 million during the third quarter. Total repurchases now represent over 9% of outstanding shares.
- Nucor entered into a strategic agreement to support the American nuclear supply chain and bolster domestic manufacturing in alignment with national energy initiatives.
Valuation Changes
- Consensus Analyst Price Target has increased slightly to $167.42 per share from $166.08, reflecting updated forecasts.
- Discount Rate has risen modestly from 7.98% to 8.49%, indicating increased perceived risk or return expectations.
- Revenue Growth projections have decreased marginally from 5.90% to 5.83%, suggesting slightly more cautious growth expectations.
- Net Profit Margin estimates have fallen from 9.38% to 8.86%, pointing to softer anticipated profitability.
- Future P/E Ratio has increased from 12.66x to 13.72x, signaling higher valuation multiples on projected earnings.
Key Takeaways
- Strategic investments in new projects and facilities may enhance operational capacity and diversify earnings, driven by rising steel demand.
- Policy changes like Section 232 tariffs could reduce import competition, supporting domestic sales growth and improved margins.
- Economic uncertainty and project execution risks could impact Nucor's revenue and margins, while management changes and policy shifts might affect operations and costs.
Catalysts
About Nucor- Engages in the manufacture and sale of steel and steel products.
- Nucor's significant capital reinvestment of $860 million, with two-thirds directed towards projects commencing operations within two years, is expected to diversify and strengthen future earnings. This impacts revenue and net margins through enhanced production capacity and efficiencies.
- The completion of new production facilities, including rebar micro mills and coating complexes, is anticipated to boost Nucor's operational capacity and potentially increase revenue due to higher product output and variety.
- Nucor's expansion into advanced product grades and new markets, such as the advanced manufacturing facilities and infrastructure projects, may facilitate revenue growth due to rising steel demand from these sectors.
- Trade policy improvements, like the reinstatement and broadening of Section 232 steel tariffs, could level the playing field for Nucor, potentially reducing import competition and supporting higher domestic sales and net margins.
- Improved backlogs in steel mills, which are up over 30%, suggest strong future demand that could translate to increased revenue through sustained order flow and pricing stability.
Nucor Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Nucor's revenue will grow by 6.5% annually over the next 3 years.
- Analysts assume that profit margins will increase from 4.2% today to 9.9% in 3 years time.
- Analysts expect earnings to reach $3.7 billion (and earnings per share of $13.27) by about September 2028, up from $1.3 billion today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.6x on those 2028 earnings, down from 25.1x today. This future PE is lower than the current PE for the US Metals and Mining industry at 22.5x.
- Analysts expect the number of shares outstanding to decline by 2.25% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.84%, as per the Simply Wall St company report.
Nucor Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Macro-economic uncertainty and volatility could negatively impact steel demand, which would in turn affect Nucor's revenue.
- Execution risk associated with new projects coming online, such as the West Virginia sheet mill, could result in operational challenges and impact earnings.
- Retirements of key executives and potential transitions may affect management execution and strategic continuity, potentially impacting operational efficiency and net margins.
- Changes in trade policy, while intended to help domestic producers, could lead to retaliation or affect Nucor's access to certain raw materials, impacting costs and net margins.
- Volatility in raw material prices, particularly scrap and DRI, could increase operating expenses and pressure margins.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $159.75 for Nucor based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $182.0, and the most bearish reporting a price target of just $145.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $37.2 billion, earnings will come to $3.7 billion, and it would be trading on a PE ratio of 11.6x, assuming you use a discount rate of 7.8%.
- Given the current share price of $141.02, the analyst price target of $159.75 is 11.7% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.