Investors Eye Nucor (NUE) Stock, Trading Near 52-Week Lows
As the new year begins, investors are keen to spot stocks that might be undervalued.
Nucor NUE, currently priced around $115 per share and close to its 52-week low, is attracting attention as a prominent steel producer in the U.S.
With a more than 30% drop over the last year, many are asking if now is the right time to invest in Nucor for a potential rebound.
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Current Industry Struggles
Nucor’s challenges reflect broader issues in the industry; the Zacks Steel-Producers Market has also dropped 30% over the past year. Weighing heavily on performance, pricing pressures have brought the cost of Hot-Rolled Coil (HRC) steel to a yearly low of $706 per metric ton.
Furthermore, increased raw material costs and supply chain disruptions have further pressured Nucor’s profitability.
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Outlook for Nucor
According to Zacks estimates, Nucor’s annual earnings are expected to fall by 53% in fiscal 2024, with projections showing earnings per share (EPS) dropping to $8.35 from $18.00 in 2023. However, FY25 EPS is expected to recover slightly, increasing by 6% to $8.83.
Total sales for Nucor are also projected to decline by 13% in FY24, with an additional 2% dip forecasted for FY25, bringing the total to $29.46 billion.
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Evaluating Nucor’s Valuation
Despite declines in revenue and earnings, Nucor’s valuation stands out at 13.9 times forward earnings. This is higher than the Zacks Steel-Producers Industry average of 9.8 times, yet lower than United States Steel’s X multiple of 15.5 times, and still provides a notable discount compared to the S&P 500. Additionally, Nucor trades at less than 1 times sales.
Image Source: Zacks Investment Research
Final Thoughts
Currently, Nucor’s stock carries a Zacks Rank of #3 (Hold). While it may not be the ideal moment for a quick rebound, the company’s appealing valuation could shift investor perceptions. For long-term investors, opportunities from these levels might prove rewarding, although waiting for potentially better buying conditions could be wise.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
