Investment Thesis
Nucor's fortress balance sheet (0.32x debt-to-equity, 2.90x current ratio) provides financial security, but declining profitability (EPS -11.1% YoY) amid 5.7% revenue growth signals margin compression and weak returns on capital (ROE 3.5%). The combination of deteriorating profitability per share, commodity steel exposure, and limited free cash flow margins justifies a neutral stance.
Strengths
- Fortress balance sheet with minimal leverage (0.32x D/E) and exceptional interest coverage (28.1x)
- Strong liquidity position: 2.90x current ratio with $2.2B cash and low working capital risk
- Solid operating cash flow generation of $886M supporting operational needs
- Positive revenue growth of 5.7% YoY demonstrates market demand in cyclical industry
Risks
- Net income and diluted EPS declining despite revenue growth indicates dangerous margin compression
- Extremely weak capital returns: ROE 3.5% and ROA 2.1% reflect poor profitability relative to asset base
- Low free cash flow margin (2.4%) with capex consuming 75% of operating cash flow limits flexibility
- Commodity steel exposure creates earnings volatility and minimal pricing power in competitive markets
Key Metrics to Watch
- Net margin trajectory and gross margin - determine if compression is temporary or structural
- Return on equity trend - currently insufficient to justify equity capital investment
- Free cash flow generation relative to capex - assess sustainability of capital allocation
- Steel pricing dynamics and input cost inflation - primary near-term profitability drivers
Financial Metrics
Revenue
9.5B
Net Income
743.0M
EPS (Diluted)
$3.23
Free Cash Flow
225.0M
Total Assets
35.6B
Cash
2.2B
Profitability Ratios
Gross Margin
6.6%
Operating Margin
11.5%
Net Margin
7.8%
ROE
3.5%
ROA
2.1%
FCF Margin
2.4%
Balance Sheet & Liquidity
Current Ratio
2.90x
Quick Ratio
1.55x
Debt/Equity
0.32x
Debt/Assets
36.7%
Interest Coverage
28.10x
Long-term Debt
6.9B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-14T06:18:23.979526 |
Data as of: 2026-04-04 |
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