Last Update 29 Oct 25
Fair value Increased 3.96%Nucor's analyst price target has been raised from $159.75 to $166.08, as analysts incorporate recent earnings updates and moderate growth forecasts into their valuations.
Analyst Commentary
Recent Street research has provided notable insights into Nucor's investment outlook, reflecting both optimistic and cautious stances from different analysts. Target price updates and initiated coverage point to nuanced opinions on the company's future performance.
Bullish Takeaways- Bullish analysts have raised their price targets on Nucor, signaling ongoing confidence in the company's fundamental outlook and ability to deliver shareholder value.
- Updates to estimates incorporate Nucor's recent earnings and management commentary. This suggests that near-term execution continues to meet or exceed expectations.
- Some analysts maintain buy or overweight ratings, citing the company's operational resilience and optimism about domestic steel demand in the coming quarters.
- There is recognition of favorable U.S. market dynamics into year-end, with anticipated benefits from tariffs as well as expectations for improving demand as supply normalizes over the medium term.
- Bearish analysts have emphasized concerns about weak near-term steel demand, which could temper earnings momentum despite recent positive catalysts.
- There is caution regarding the impact of increasing domestic supply in the sector by 2026, which may introduce pricing pressure and challenge profit margins.
- Market participants highlight less confidence in global players compared to U.S.-focused names. This reflects lingering macroeconomic uncertainties and competitive risks from international peers.
- Volatility in steel prices and the possible lag in benefit realization from tariffs remain risks that analysts are monitoring closely as they revise their price targets.
What's in the News
- Canada plans to remove retaliatory tariffs on many U.S. products, but is likely to maintain 25% import taxes on U.S. steel and aluminum as well as tariffs on autos. This could potentially impact Nucor (Bloomberg).
- The Trump administration expanded steel and aluminum tariffs to include 407 additional derivative product codes, affecting steelmakers such as Nucor (Reuters).
- New U.S. tariffs imposed on dozens of countries include a 35% duty on many goods from Canada and higher rates for Brazil, India, Taiwan, and Switzerland, affecting the global steel trade and companies like Nucor (Reuters).
Valuation Changes
- Consensus Analyst Price Target has risen moderately from $159.75 to $166.08, reflecting updated outlooks and revised earnings forecasts.
- The Discount Rate increased slightly from 7.84% to 7.98%, indicating a minor adjustment in perceived investment risk.
- Revenue Growth projections have fallen from 6.48% to 5.90%, suggesting a somewhat more cautious outlook on top-line expansion.
- The Net Profit Margin forecast declined from 9.92% to 9.38%, signaling marginally lower expected earnings efficiency.
- The Future P/E ratio moved up from 11.63x to 12.66x, indicating higher valuation for anticipated 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.
Read more narratives
There are no other narratives for this company.
View all narratives