Nucor Reaping Fat Profits, But Worries Of Prices And Capacity Loom Over The Stock

About: Nucor Corporation (NUE)
by: Stephen Simpson, CFA
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Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

Nucor is generating record margins and cash flows as high pricing, healthy shipments, and great spreads are all driving the financial results higher.

The market is increasingly worried about weakening steel prices and industry capacity additions, though Nucor's capacity plans seem more niche/specialty-focused than most.

Nucor shares do look undervalued, but it will be tough for the shares to outperform into expectations of double-digit declines in EBITDA in the coming years.

The frustrating reality of investing in commodity companies/stocks is that the stocks are not always (or even often) performing their best when the company’s financials are at their best, and vice versa. While Nucor (