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    NUE · NYQ · Basic Materials

    Nucor Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 75.61

    Market price

    USD 248.38

    Implied upside

    -69.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 8.0% of revenue against depreciation of 3.7%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 75.61-69.6%
    Exit multiple
    USD 171.54-30.9%
    Market price
    USD 248.38

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 29.9bnUSD 27.6bnUSD 25.4bnUSD 23.4bnUSD 21.6bn-7.8%
    EBITUSD 4.6bnUSD 4.2bnUSD 3.9bnUSD 3.6bnUSD 3.3bn-7.8%
    NOPATUSD 3.6bnUSD 3.3bnUSD 3.1bnUSD 2.8bnUSD 2.6bn-7.8%
    Add depreciation & amortisationUSD 1.1bnUSD 1.0bnUSD 947.0mUSD 872.7mUSD 804.3m-7.8%
    Less capital expenditureUSD -2.4bnUSD -2.2bnUSD -2.0bnUSD -1.9bnUSD -1.7bn-7.8%
    Less increase in working capitalUSD 321.5mUSD 296.3mUSD 273.1mUSD 251.7mUSD 231.9m+7.8%
    Free cashflow to firmUSD 2.7bnUSD 2.5bnUSD 2.3bnUSD 2.1bnUSD 1.9bn-7.8%
    Discount factor0.94220.83640.74250.65920.5852-
    Present valueUSD 2.5bnUSD 2.1bnUSD 1.7bnUSD 1.4bnUSD 1.1bn-18.2%
    Present Value Of The ForecastUSD 8.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.590Reported 1.881, pulled toward 1.0 (Blume)
    Cost of equity13.74%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 56.4bn88.8% of capital
    Total debtUSD 7.1bn11.2% of capital, book value as a proxy
    Tax rate20.9%Effective, capped at statutory
    WACC12.65%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 75.61

    60% of EV

    Forecast FCFF, final year
    USD 1.9bn
    Capex at depreciation, working capital in reinvestment
    USD 2.7bn
    Less reinvestment at g/ROIC (18.8% of NOPAT)
    USD -514.5m
    Capitalised
    USD 2.2bn
    ROIC (reported)
    13.3%
    Terminal value, undiscounted
    USD 22.4bn
    Terminal value, discounted
    USD 13.1bn
    Enterprise value
    USD 21.9bn
    Less net debt
    USD 4.4bn
    Equity value
    USD 17.5bn

    Exit at 14.7x EBITDA

    Value per shareUSD 171.54

    80% of EV

    Terminal value, undiscounted
    USD 60.3bn
    Terminal value, discounted
    USD 35.3bn
    Enterprise value
    USD 44.0bn
    Less net debt
    USD 4.4bn
    Equity value
    USD 39.6bn

    Spread between methods: 78%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    10.65%94.1995.5296.9898.59100.39
    11.65%83.5184.2985.1386.0387.01
    12.65%74.7575.1775.6176.0676.54
    13.65%67.6067.8568.0968.3468.58
    14.65%61.7761.9862.2062.4262.64

    Outlined: this model. Green text: above today's price of 248.38. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-7.8%20.3%+28.1pp
    EBIT margin15.3%40.3%+25.0pp
    Discount rate12.6%5.9%-6.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.