Nucor Corporation : US steel giant

Nucor Corporation is North America's largest steel manufacturer, playing a major role within data centers, energy infrastructure, domestic manufacturing, and semiconductor plant construction. Its industrial platform whose electric arc furnace (EAF) model generates a structural cost advantage, a lower carbon footprint, and a more resilient earnings profile than its peers. Let's take a closer look.

The North American steel market is undergoing a major shift, driven by Section 232 tariffs raised to 50% in 2025, which reduced import share from ~25% to ~14%. These tariffs, along with resolved trade cases in corrosion-resistant steel and rebar, are expected to further limit imports in 2026. Demand remains stable, with ~1.8% growth projected by the World Steel Association, supported by the Fed’s ~2.3% GDP outlook.

At the same time, structural tailwinds are strong and aligned with Nucor’s exposure - including data centers (AI-driven), the CHIPS Act, grid modernization, renewables, and infrastructure spending. Scrap prices remained relatively stable (~$392 vs. $394), supporting margins. Key risks include global overcapacity (~165Mt by 2027), potential tariff reversal (USMCA renegotiation in July 2026), and sensitivity to non-residential construction and broader macro conditions.

Nucor operates across three segments: Steel Mills (62% of sales, $20.0B revenue), producing sheet, plate, structural, and bar steel via 26 EAF-based mills with ~30Mt capacity; Steel Products ($10.3B), covering joists and deck (Vulcraft/Verco), buildings, panels, tubular, rebar fabrication, racking, doors, and utility structures; and Raw Materials ($2.2B), including DJJ and two DRI plants supplying ~3.3Mt of iron units annually.

The company holds ~18% U.S. market share, competing mainly with Cleveland-Cliffs (blast furnace, automotive-focused, trading at a ~4.6x EV/EBITDA discount) and Steel Dynamics (~10% share, closest EAF peer). Its key advantage is a flexible, low fixed-cost EAF model, allowing it to stay profitable through cycles (since 1966), supported by differentiated products like AEOS®, ECONIQ™, and ELYCION® that help drive premium pricing.

The core of Nucor’s growth strategy is the $4B West Virginia sheet mill (net of $350M state support), adding ~3Mt of annual capacity by end-2026. At the same time, recent projects in Arizona, North Carolina, Indiana, and Alabama are ramping up and starting to contribute to earnings. As these assets mature, pre-operating costs are declining (from $594M to $496M) and CapEx is set to drop from $3.4B to ~$2.5B in 2026, driving a clear inflection in free cash flow.

Full-year 2025 revenue grew 6% to $32.49B, driven by a 7% increase in volumes (26.6Mt), partially offset by a 2% decline in average selling price ($1,221/ton). EBITDA came in at $4.17B (12.8% margin), down 4% YoY, while net income fell 14% to $1.74B ($7.52 EPS), mainly due to pricing pressure in Steel Products. Q4 showed improvement, with revenue up 9% YoY to $7.69B and EBITDA up 22% to $918M, though full-year margins declined slightly (12% vs. 13%) as pricing normalized from peak levels.

Nucor has $7.12B in total debt (1.7x EBITDA) and $2.70B in cash, implying net debt of $4.42B (1.1x EBITDA). ROE declined to 8.5% in 2025 but is expected to recover toward ~11.5% as new capacity ramps. Nucor maintains strong liquidity, including an undrawn $2.25B revolver. Capital returns remain a priority, with ~$1.2B returned in 2025 through dividends and buybacks.

Nucor trades at 21.6x P/E ratio and ~13.4x 2026 consensus EPS (~$12.09). EV/EBITDA is ~8.0x, in line with Steel Dynamics and at a premium to Cleveland-Cliffs (~6.5x), reflecting its stronger balance sheet and execution. It also trades at ~1.1x EV/Sales and yields ~1.4%, supported by 53 consecutive years of dividend growth. 

Key risks include steel’s cyclical nature, with EBITDA already down 43% from 2023 to 2025 on pricing normalization, and further downside possible if macro conditions weaken. The group also relies heavily on Section 232 tariffs (50%), with any rollback or USMCA-driven changes potentially reintroducing import pressure. Execution risk remains around the $4B West Virginia mill, where delays or cost overruns could weigh on earnings, while exposure to volatile scrap and energy costs adds another layer of uncertainty. Finally, Nucor’s $4.3B goodwill and $2.9B intangibles could face impairment if Steel Products demand weakens or acquisitions underperform.

Nucor benefits from higher volumes, improved project economics, supportive trade dynamics, and strong demand from data centers, energy, and manufacturing, the setup for earnings recovery is solid. As one of the highest-quality US steel names, the company is worth keeping a close eye on, as it could add strong diversification to a portfolio.