Nucor (NUE) 2013 Review

Nucor Corp is a manufacturer of steel and steel products (hot rolled steel shapes and cold finished bars, joists and deck) utilizing scrap, electric furnaces, continuous casters and automated rolling mills.  While the economic malaise since 2008 has kept profits flat, the company has grown dividends at a 20% pace over the last 10 years earning a return on equity as high as 35%.  Despite recent difficulties, the longer term outlook for NUE remains bright because:

(1) very diversified client and geographic base,

(2) highly variable cost structure,

(3) an aggressive acquisition program (latest: Skyline Steel) that concentrates on purchases that is accretive via new cost saving technologies or add-ons to its product line,

Negatives:

(1) continued sluggish global economic growth, especially in Europe which is NUE’s largest market,

(2) surging imports,

(3) it is in a highly competitive industry.

Nucor is rated A by Value Line, carries a 30% debt to equity ratio and its stock yields over 3.3%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases  

                 Yield      Growth Rate     Ratio       Since 2003

NUE          3.3%            6%             50%            10*

Ind Ave      2.5               8                35               NA 

                Debt/                        EPS Down       Net        Value Line

                Equity         ROE      Since 2003      Margin       Rating

NUE         30%            12%            4                5%           A

Ind Ave     36                8              NA              4             NA

*NUE pays bonus dividends which distort the dividend statistics.

     Chart

            Note: NUE stock made decent initial progress off its November 2008 low, surpassing the downtrend off its May 2008 high (straight red line) and the November 2008 trading high (green line).  Long term, the stock is in an uptrend (blue lines).  Intermediate term, it is in an uptrend (purple lines).  The wiggly red line is the 50 day moving average.  The Dividend Growth Portfolio owns a full position in NUE.  The upper boundary of its Buy Value Range is $49; the lower boundary of its Sell Half Range is $114.

 

   

 

http://finance.yahoo.com/q?s=NUE

12/13