Materials Select Sector

S&P 500

The Balanced Allocator

Comparable Companies - NUE

The insider trading record shows 0 discretionary purchases and 34 discretionary sales totaling $24,869,154.16 in value. The latest short interest is 1.9% of float with a days‑to‑cover ratio of 2.0. The largest institutional holders are Vanguard Group Inc. (12.5% stake), State Farm Mutual Automobile Insurance Co. (10.7%), and BlackRock Inc. (8.2%).

EXECUTIVE VICE PRESIDENT

CHAIR, PRESIDENT AND CEO

CFO AND EVP

VICE PRES. AND CORP. CONTRO

Beneficial ownership of 12,133,411 shares representing 5.3% of the class.

Beneficial ownership of 16,988,988 shares representing 7.4% of the class.

Continues to serve in the combined role of Chair and CEO, a position held since January 2020 (CEO) and September 2022 (Chair).

Chair, President and Chief Executive Officer

Remains in the role of CFO, having succeeded James Frias in 2022.

Chief Financial Officer, Treasurer and Executive Vice President

Continues to oversee company-wide operations as COO.

Chief Operating Officer

Maintains oversight of the raw materials segment.

Executive Vice President, Raw Materials

Continues to lead the commercial strategy for the corporation.

Executive Vice President, Commercial

Remains responsible for identifying and scaling new business lines.

Executive Vice President, New Markets and Innovation

Continues to lead corporate strategy and business development.

Executive Vice President, Strategy

Remains the chief legal officer for the corporation.

President of Corporate Legal Affairs & General Counsel

Continues to lead the human resources and talent development functions.

Vice President, Human Resources and Talent

Leon J. Topalian

Stephen D. Laxton

Christopher J. Kearney

Michael W. Lamach

Leon Topalian is a Nucor veteran whose career trajectory reflects a deep immersion in the company's unique operational culture. Since assuming the CEO role in 2020, he has shifted Nucor's strategy toward aggressive downstream expansion and high-value sheet products, evidenced by the $3 billion C.H.I. acquisition. His provenance is defined by a transition from operational management of structural mills to a strategic architect of a more diversified, value-added steel enterprise. His leadership has coincided with record-breaking financial performance for the company, solidifying his reputation as a disciplined but growth-oriented capital allocator.

Stephen Laxton's provenance is rooted in strategic planning and business development, making him a CFO with a distinct focus on long-term value creation rather than just accounting oversight. Having spent over two decades at Nucor, he was instrumental in the company's M&A strategy before taking the financial helm. His tenure as CFO has been characterized by the successful financing of Nucor's largest capital expenditure cycle in history, demonstrating a sophisticated ability to balance aggressive reinvestment with shareholder returns via dividends and buybacks.

Norma B. Clayton

Patrick J. Dempsey

Nicholas C. Gangestad

Laurette T. Koellner

Nadja Y. West

The company operates a circular manufacturing model, producing high-quality, lower-carbon-emission products with recycled scrap as the primary input. Steel Dynamics is one of the largest domestic steel producers and metals recyclers in North America based on estimated steelmaking and steel coating capacity of approximately 16 million tons and actual metals recycling volumes as of December 31, 2025, with one of the most diversified product and end market portfolios in the domestic steel industry, combined with a meaningful downstream steel fabrication platform. The company also has aluminum operations, further diversifying its product offerings to supply aluminum flat rolled products with higher recycled content to the countercyclical, sustainable beverage can industry, as well as the automotive and industrial sectors. The company's primary sources of revenue are currently derived from the manufacture and sale of steel products, the processing and sale of recycled ferrous and nonferrous metals, and the fabrication and sale of steel joist and deck products. We refer to our founding principles as our six core strategic pillars. These pillars unify our teams around a common focus and provide the foundation for how we operate and grow. Our unique entrepreneurial culture and business model create operational and financial advantages and support the responsible use of resources across diverse economic environments. Innovation in all forms is essential to our success, and our teams focus on working smarter within existing operations while pursuing opportunities for continued growth. This includes developing solutions for our teammates, customers, suppliers, and other stakeholders, as well as finding ways to operate with fewer resources and less environmental impact.

ArcelorMittal is an established metals & mining industry leader, with a unique offering of global scale, product diversity and supply chain integration, backed by continuous innovation and a strong balance sheet.

Throughout 2025, we continued to position the Company for long-term success and further established ourselves as a leading North America based steel producer, particularly for the automotive industry. We announced a potential strategic partnership with a top-ten global steel producer, optimized our operational footprint, moved away from non-core assets, signed multi-year fixed price contracts with major automotive customers and further reduced unit costs year-over-year. The operational changes to our footprint, along with our commercial and strategic initiatives, further strengthen our position as a North American leader in the steel industry and are expected to create value for all Company stakeholders.

Cleveland-Cliffs is a vertically integrated steel producer focused on the automotive market, with a low-carbon product offering and existing capacity to meet growing domestic demand. The company has become a supplier of choice for many US-based European and Asian automotive producers due to its lower carbon content capabilities and multi-year fixed-price contracts.

Nucor owns the majority of its operating facilities, including 84 raw-materials sites in 19 U.S. states and Trinidad, 91 steel-products sites across 39 states, Canada and Mexico, and numerous steel-mill plants such as Fontana, CA; Hickman, AR; Berkeley County, SC; and the under-construction sheet mill in Mason County, WV. Executive offices are owned in Charlotte, NC.

Nucor's cyclical operator profile shows revenue rebounding 5.7% to $32.5B in FY2025 amid infrastructure demand, yet margins compressed to 8.0% operating with negative free cash flow of -$143M from $3.4B capex; management under CEO Topalian since 2020 delivers adequate allocation via buybacks reducing shares 1.1% YoY, supported by strong board oversight, but pro-cyclical buyback timing, low M&A effectiveness, net insider selling, and internal-only track records limit alignment for through-cycle mastery.

Nucor is subject to federal, state, and local environmental laws and regulations, including the Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act, and Comprehensive Environmental Response, Compensation, and Liability Act. The company incurs costs for compliance and remediation, and potential changes in regulations could increase costs and adversely affect operations.

Nucor employs approximately 33,000 teammates, with the majority non-union and based in the United States. Safety metrics for 2025 include an Injury/Illness Rate of 0.71 and a DART Case Rate of 0.30.

No specific disclosures regarding product and customer responsibility were found in the annual filing.

Nucor discloses policies including a Human Rights Policy, Supplier Code of Conduct, and Policy on Eliminating Forced Labor from our Supply Chain. The company manages its raw material supply chain through investments in DRI production and scrap brokerage, and has closed loop recycling programs with customers.

Revenue grew 5.7% YoY to $32.5 B, but gross margin fell 1.4 pp to 11.9%, net margin slipped to 5.4%, EPS declined 10% to $1.73, and free cash flow turned negative $143 M in FY 2025.

The transcript series repeatedly referenced the West Virginia sheet‑mill (now 75% complete), the Lexington rebar micro‑mill, the Kingman melt‑shop, and new galvanizing lines as the primary growth engines, while also noting a strategic cancellation of the Pacific Northwest rebar mill to preserve capital discipline.

The 10‑K disclosed no material impairments in FY 2025, and the auditor identified goodwill impairment as a Critical Audit Matter, indicating judgment risk but no actual write‑down in the period. Asset growth is driven primarily by PP&E additions tied to the West Virginia sheet‑mill and other new facilities.

Capital projects such as the West Virginia sheet‑mill, new NTS facilities, and the Lexington rebar micro‑mill are still in start‑up mode, generating pre‑operating costs that depress incremental returns; the transcript notes that these assets are expected to become EBITDA‑positive by Q1 2026, but current performance is below the 6% ROIC hurdle.

Term notes, 2.950% due 2027 (originally $101m)

2025 Notes (2.000% and 3.950% due 2025) - redeemed

West Virginia Economic Development Authority IDRBs

EV/EBITDA

Allen C. Behr

The Vanguard Group, Inc.

State Farm Mutual Automobile Insurance Company and related entities

BlackRock, Inc.

State Street Corporation

Daniel R. Needham

K. Rex Query

Kenneth Rex Query

Michael D Keller

Randy J Spicer

Benjamin M Pickett

Election of eight directors nominated by the Board of Directors

Ratification of the appointment of PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for 2025

Advisory vote to approve Nucor's named executive officer compensation in 2024

Approval of the Nucor Corporation 2025 Omnibus Incentive Compensation Plan

Executive Vice President of Raw Materials

Executive Vice President of Commercial

David A. Sumoski

D. Chad Utermark

Executive Vice President of New Markets & Innovation

Douglas R. Wilner

Executive Vice President of Strategy

President, Chief Executive Officer & Chairman of the Board

Chief Financial Officer, Treasurer & Executive Vice President

Elizabeth Bledsoe

President of Human Resources & Talent

Held WACC 12.6% and base terminal multiple 8.0x constant, solved backward from current EV 44060 using base FCFF path.

Balance Sheet - Supplemental

Balance Sheet

Cash Flow Statement - Supplemental

Cash Flow Statement

Income Statement - Supplemental

Income Statement

Ratios

Valuation

Historical Ratios & Multiples - NUE

Steel peak cycle (accelerating capex, rational pricing); tariffs tailwind but scrap volatility headwind; NUE outperforms peers (ROIC 8.4% > med 2.5%).

Steel at peak cycle; recent EPS miss underscores downside risk now.

Q1 2026 earnings beat on 5% steel shipments growth, validating backlog. Addresses margin fears via utilization leverage.

Nucor's scrap-based EAF model delivers cost edge (op margin 8.0% > peer med 2.5%), but peak capital cycle (capex rev 10.4% > peer med 6.1%) and margin compression signal downside. Earnings misses and insider sales ($24.9M) confirm overvaluation; NLV provides floor but equity wipeout risk in deep trough.

Lower-for-longer downturn erodes margins below 8.0%, turning FCF more negative.

Recession trough; margins 8.5%, FCF low; floor NLV $35.96 as equity $0 in credit event (cov >3.5x trough).

Adequate stewardship (score 2/3); strong board (ex-CEOs Otis/Trane) offsets insider sales ($24.9M, 0 buys).

Nucor's current asset base consists of a highly modern fleet of 25+ primary steel mills and over 300 downstream fabrication and raw material facilities. The core footprint includes 31,200,000 tons of annual steelmaking capacity across Sheet (14.5M tons), Bar (9.8M tons), Structural (3.3M tons), and Plate (3.6M tons) segments. Significant recent additions identified in the P7 Transcript Analysis include the completed Lexington rebar micro-mill (430,000 tons), the Kingman melt shop, and the Alabama Towers & Structures facility. Crucially, the asset base includes the state-of-the-art West Virginia sheet mill, which is currently 75% complete and represents a 3,000,000-ton capacity expansion. The machinery is predominantly Electric Arc Furnace (EAF) technology, which maintains higher resale and strategic value than traditional integrated blast furnaces.

Nippon Steel acquisition of U.S. Steel (X) for an enterprise value of approximately $14,100,000,000. While U.S. Steel operates older integrated assets, the deal implied a valuation of approximately $700 per ton of capacity for a mixed asset base.

Cleveland-Cliffs acquisition of ArcelorMittal USA assets for approximately $1,400,000,000. This transaction involved older, distressed integrated assets, providing a lower-bound floor for industrial steel PP&E.

Cash & Equivalents

Accounts Receivable

Nucor's inventory is highly liquid, consisting of 5,462,000,000 in primarily commodity-grade steel and scrap. The 5.36x turnover rate confirms that the inventory is not aged or specialized to the point of illiquidity. In an orderly liquidation, the 35% raw material component (scrap) acts as a near-cash asset, typically recovering 90%+. The 65% finished goods component is subject to greater market price risk but remains fungible across the construction and automotive sectors. A base recovery of 80% is justified by the vertical integration and standard specifications of Nucor's product lines.

Inventory

Short-Term Inv.

Other Current Assets

Net PP&E

Intangibles

Other Non-Current

Accounts Payable

Current Debt

Other Current Liabilities

Non-Current Debt

Other Non-Current Liabilities

Nucor reports Q3 2025 earnings of $607 million ($2.63 per share)

Nucor price target lowered to $140 from $146 at Wells Fargo

Market/Sector Move -5.98%

Nucor reports Q3 2024 earnings of $249.9 million ($1.05 per share)

Nucor reports Q1 2024 earnings of $844.8 million ($3.46 per share)

Nucor reports Q4 2023 earnings of $785.4 million ($3.16 per share)

Nucor reports Q1 2023 earnings of $1.14 billion ($4.45 per share)

Nucor reports record annual earnings for 2022 with $7.61 billion net income

Nucor reports Q3 2022 earnings of $1.69 billion ($6.50 per share)

Nucor reports record Q2 2022 earnings of $2.56 billion ($9.67 per share)

Nucor reports record Q1 2022 earnings of $2.10 billion ($7.67 per share)

Nucor Announces New Share Repurchase Program

Nucor reports record Q1 2021 earnings of $942.4 million ($3.10 per share)

Nucor Corporation 2021 Annual Meeting proxy statement filed

Nucor downgraded to Neutral from Buy at UBS on 'full' valuation

Nucor downgraded to Equal Weight from Overweight at Morgan Stanley

Nucor price target lowered to $176 from $178 at Wells Fargo

Nucor price target raised to $147 from $140 at Wells Fargo

Nucor price target raised to $165 from $152 at Morgan Stanley

Situation: Current price is $172.1 versus fair value $121.48 (-29.4% expected return), and valuation confidence is stable. Debate: Bull case depends on Q1 2026 earnings beat on 5% steel shipments growth, validating backlog. Bear case centers on Lower-for-longer downturn erodes margins below 8.0%, turning FCF more negative. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.

Executive Summary

Nucor's scrap-based EAF model delivers cost edge (op margin 8.0% > peer med 2.5%), but peak capital cycle (capex rev 10.4% > peer med 6.1%) and margin compression signal downside. Earnings misses and insider sales ($24.9M) confirm overvaluation; NLV provides floor but equity wipeout risk in deep trough.<ul><li>Driver: Overvalued at peak cycle with deteriorating profitability (TTM op margin 8.0% vs 21.6% 5Y avg) and negative FCF (-$143M) despite $3.4B capex.</li><li>Catalyst: Q4 2025 EPS miss ($1.73 vs est $1.91) and ongoing margin pressure from scrap/energy costs.</li><li>Protection: NLV floor $35.96/share from $11.5B PP&E OLV at $370/ton capacity.</li></ul>Market extrapolates trough earnings into perpetuity at 11.6x EV/EBITDA, pricing as broken; our analysis shows historical trough P/TB 1.4x already reflects cycle bottom, with no inflection as utilization ~85% and backlogs peak.Short-term cyclical trade to capture downside from peak to trough normalization, not long-term compounder.

Core Investment Rationale

Nucor manufactures steel via low-cost EAF using scrap/DRI, serving construction (infrastructure/data centers), automotive, energy. Steel Mills (hot/cold-rolled sheet, plate, beams, bars) 70% revenue; Steel Products (tubing, joists, grating) 20%; Raw Materials (DRI, scrap brokerage) 10%. Strategy: 'Grow Core, Expand Beyond' via $3.4B 2025 capex on West Virginia sheet mill (3M tons, 75% complete), Lexington rebar (430k tons EBITDA+ Q1 2026), data centers (95% components).Core assets: 31.2M tons EAF capacity (sheet 14.5M, bar 9.8M tons) with operational leverage; West Virginia mill ($3.1B, $1033/ton replacement) boosts sheet for auto/durables. Inventory $5.5B (5.4x turnover, 80% OLV recovery). PP&E $15.3B yields high fixed-cost leverage in upcycle.Oligopoly (NUE 39B cap leads STLD 26B, MT 42B, X 12B, CLF 6B; 85% capacity). NUE cost edge (op margin 8.0% > peer med 2.5%) from scrap/DRI, but imports ~14% pressure pricing. Rational competition; tariffs protect.Last cycle (2021 peak: rev +81% YoY, op margin 25.4%, FCF $4.6B; 2022 trough: rev +14%, margin 25.1%, FCF $8.2B; 2025: rev +6%, margin 8.0%, FCF -$143M) saw cap alloc shift from aggressive buybacks ($10.3B, -25% shares) at low multiples (3.0x EV/EBIT) to growth capex ($12.3B). Current: Peak capex 10.4% rev, negative inc ROIC -9.4%, insider sales $24.9M; no proxy fights/M&A rumors.

Business & Situation

<ul><li>Bull Case: 1. 40% YoY steel mills backlog, 85% utilization signal inflection; 2. Data centers (double-digit growth, 95% supply); 3. Tariffs sustain pricing (imports 14%).</li><li>Bear Case: 1. Margin compression (gross 11.9% vs 21.6% 5Y avg); 2. Peak cap cycle (capex/depr 228%); 3. Negative FCF -$143M, inc ROIC -9.4%.</li></ul>Consensus views Nucor as cycle beneficiary with expansions unlocking leverage; PTs $176-183 imply modest upside on backlog/infra tailwinds. Analysts overlook peak capex drag.Steel peak cycle (accelerating capex, rational pricing); tariffs tailwind but scrap volatility headwind; NUE outperforms peers (ROIC 8.4% > med 2.5%).Market extrapolates trough 1.4x P/TB indefinitely; we see no inflection as margins trough, capex peaks, historical trough EV/Sales 1.1x already met.Bear case prevails: Deteriorating FCF/ROIC outweigh backlog; sell to $121 fair value.Granular supply discipline analysis shows upcycle weaker/shorter than priced; trough multiples already reflect no recovery.

Core Thesis

CEO Topalian (since 2020) oversaw $3B CHI acquisition (0.2x effectiveness), $3.4B capex; no CEO transition/proxy fight.Pro-cyclical buybacks ($10.3B, recent ROI -7.7% at 6.5x EV/EBIT); M&A 0.2x on $5.8B.Guidance hit 60% rev/EPS; transparent on start-up costs $496M.<ul><li>Board Independence: 87% (7 of 8 directors)</li><li>Chairman/CEO Roles: Combined</li><li>Chairman Tenure: 4 years</li><li>Insider Ownership: 0.6%</li><li>Shareholder Rights: Majority voting, stock guidelines</li></ul>Adequate stewardship (score 2/3); strong board (ex-CEOs Otis/Trane) offsets insider sales ($24.9M, 0 buys).

Leadership & Governance

Trough P/TB 1.4x on $13.8B TBV; Bear DCF $65 > floor, but NLV $35.96 used as orderly liq (PP&E $370/ton).Rev +7.4% Y1 to $34.9B, margins to 9.5%, FCF $438M; mid-cycle norm.Tariffs/data centers; $216/share blue-sky.Recession trough; margins 8.5%, FCF low; floor NLV $35.96 as equity $0 in credit event (cov >3.5x trough).

Valuation Context

<ul><li>Q1 2026 earnings beat on 5% steel shipments growth, validating backlog. Addresses margin fears via utilization leverage.</li><li>Nucor's scrap-based EAF model delivers cost edge (op margin 8.0% > peer med 2.5%), but peak capital cycle (capex rev 10.4% > peer med 6.1%) and margin compression signal downside. Earnings misses and insider sales ($24.9M) confirm overvaluation; NLV provides floor but equity wipeout risk in deep trough.</li><li>Steel at peak cycle; recent EPS miss underscores downside risk now.</li></ul>Steel at peak cycle; recent EPS miss underscores downside risk now.

Catalyst Path & Context

<ul><li>Lower-for-longer downturn erodes margins below 8.0%, turning FCF more negative. Scrap volatility, auto/resi soft; debt/EBITDA 1.3x.</li><li>Recession trough; margins 8.5%, FCF low; floor NLV $35.96 as equity $0 in credit event (cov >3.5x trough). Risk monitor: Current price $172.1 vs fair value $121.48, expected return -29.4%.</li><li>Adequate stewardship (score 2/3); strong board (ex-CEOs Otis/Trane) offsets insider sales ($24.9M, 0 buys). Risk monitor: Current price $172.1 vs fair value $121.48, expected return -29.4%.</li></ul>

Primary Risks

<ul><li>Entry Target: No new entries: recommendation is Sell.</li><li>Stop Loss: No stop-loss needed because recommendation is Sell (no position).</li><li>Position Size: Position size is None under current recommendation and risk constraints.</li><li>Time Horizon: N/A for a Sell recommendation.</li></ul><ul><li>Mgmt guides higher Q1 earnings.</li><li>Monitoring trigger: Current price $172.1 vs fair value $121.48, expected return -29.4%.</li><li>Scrap volatility, auto/resi soft; debt/EBITDA 1.3x.</li></ul>Backlog contracts >20% or capex cut signaling deeper trough. Also require valuation reliability to improve before re-entering.

Actionable Parameters & Monitoring

NUE appears overvalued (fair value $121.48 vs current $172.1, expected return -29.4%). Recommendation: Sell; do not allocate until valuation and risk profile reset.

Final Conclusion

Overvalued at peak cycle with deteriorating profitability (TTM op margin 8.0% vs 21.6% 5Y avg) and negative FCF (-$143M) despite $3.4B capex.

Driver

Q4 2025 EPS miss ($1.73 vs est $1.91) and ongoing margin pressure from scrap/energy costs.

Catalyst

NLV floor $35.96/share from $11.5B PP&E OLV at $370/ton capacity.

Protection

1. 40% YoY steel mills backlog, 85% utilization signal inflection; 2. Data centers (double-digit growth, 95% supply); 3. Tariffs sustain pricing (imports 14%).

Bull Case

1. Margin compression (gross 11.9% vs 21.6% 5Y avg); 2. Peak cap cycle (capex/depr 228%); 3. Negative FCF -$143M, inc ROIC -9.4%.

Bear Case

Situation: Current price is $172.1 versus fair value $121.48 (-29.4% expected return), and valuation confidence is stable. Debate: Bull case depends on Q1 2026 earnings beat on 5% steel shipments growth, validating backlog. Bear case centers on Lower-for-longer downturn erodes margins below 8.0%, turning FCF more negative. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.

The strategy has evolved from a broad, multi-year capital campaign focused on core steel mill expansions and new finishing capabilities toward a more targeted integration of downstream data center infrastructure and a disciplined assessment of project economics, exemplified by the cancellation of the Pacific Northwest rebar mill.

Method	Implied Value	Weight	Weighted Value
DCF	$151.68	40%	$60.67
Comps	$97.28	35%	$34.05
Historicals	$124.81	20%	$24.96
NLV	$35.96	5%	$1.80
Total Weighted			$121.48

NUE

Company Overview

Price History