Intrinsic value of Nucor - NUE

Previous Close

$53.50

  Intrinsic Value

$4.55

stock screener

  Rating & Target

str. sell

-91%

  Value-price divergence*

-95%

Previous close

$53.50

 
Intrinsic value

$4.55

 
Up/down potential

-91%

 
Rating

str. sell

 
Value-price divergence*

-95%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of NUE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 17.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -1.41
  21.90
  20.21
  18.69
  17.32
  16.09
  14.98
  13.98
  13.08
  12.27
  11.55
  10.89
  10.30
  9.77
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.28
  7.05
  6.85
  6.66
  6.50
  6.35
  6.21
  6.09
  5.98
  5.88
  5.80
Revenue, $m
  16,208
  19,758
  23,751
  28,189
  33,072
  38,392
  44,143
  50,315
  56,898
  63,882
  71,259
  79,021
  87,163
  95,681
  104,575
  113,847
  123,501
  133,543
  143,984
  154,836
  166,113
  177,831
  190,011
  202,674
  215,843
  229,545
  243,807
  258,660
  274,135
  290,266
  307,090
Variable operating expenses, $m
 
  19,219
  23,061
  27,333
  32,031
  37,152
  42,686
  48,625
  54,960
  61,681
  68,780
  76,044
  83,879
  92,077
  100,636
  109,559
  118,849
  128,513
  138,561
  149,004
  159,856
  171,133
  182,854
  195,040
  207,713
  220,899
  234,624
  248,917
  263,809
  279,333
  295,523
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  14,766
  19,219
  23,061
  27,333
  32,031
  37,152
  42,686
  48,625
  54,960
  61,681
  68,780
  76,044
  83,879
  92,077
  100,636
  109,559
  118,849
  128,513
  138,561
  149,004
  159,856
  171,133
  182,854
  195,040
  207,713
  220,899
  234,624
  248,917
  263,809
  279,333
  295,523
Operating income, $m
  1,442
  539
  689
  856
  1,040
  1,241
  1,457
  1,690
  1,938
  2,201
  2,479
  2,976
  3,283
  3,604
  3,939
  4,288
  4,652
  5,030
  5,423
  5,832
  6,257
  6,698
  7,157
  7,634
  8,130
  8,646
  9,183
  9,743
  10,326
  10,933
  11,567
EBITDA, $m
  2,129
  1,346
  1,618
  1,921
  2,253
  2,616
  3,008
  3,428
  3,877
  4,353
  4,855
  5,384
  5,939
  6,520
  7,126
  7,757
  8,415
  9,099
  9,811
  10,550
  11,319
  12,117
  12,947
  13,810
  14,707
  15,641
  16,613
  17,625
  18,679
  19,778
  20,925
Interest expense (income), $m
  183
  157
  219
  288
  366
  451
  543
  644
  751
  866
  987
  1,116
  1,251
  1,393
  1,541
  1,696
  1,858
  2,026
  2,201
  2,383
  2,572
  2,768
  2,973
  3,185
  3,405
  3,635
  3,874
  4,122
  4,381
  4,650
  4,931
Earnings before tax, $m
  1,299
  382
  471
  568
  675
  790
  914
  1,046
  1,187
  1,335
  1,491
  1,860
  2,032
  2,211
  2,398
  2,592
  2,794
  3,004
  3,222
  3,449
  3,685
  3,930
  4,184
  4,449
  4,725
  5,011
  5,310
  5,621
  5,945
  6,283
  6,636
Tax expense, $m
  399
  103
  127
  153
  182
  213
  247
  283
  320
  360
  403
  502
  549
  597
  647
  700
  754
  811
  870
  931
  995
  1,061
  1,130
  1,201
  1,276
  1,353
  1,434
  1,518
  1,605
  1,696
  1,792
Net income, $m
  796
  279
  344
  415
  493
  577
  667
  764
  866
  975
  1,089
  1,358
  1,483
  1,614
  1,750
  1,892
  2,040
  2,193
  2,352
  2,518
  2,690
  2,869
  3,055
  3,248
  3,449
  3,658
  3,876
  4,103
  4,340
  4,587
  4,844

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,196
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  15,224
  15,882
  19,092
  22,660
  26,585
  30,862
  35,485
  40,446
  45,738
  51,352
  57,282
  63,521
  70,066
  76,914
  84,064
  91,517
  99,277
  107,350
  115,743
  124,466
  133,531
  142,951
  152,742
  162,921
  173,508
  184,522
  195,987
  207,926
  220,366
  233,333
  246,857
Adjusted assets (=assets-cash), $m
  13,028
  15,882
  19,092
  22,660
  26,585
  30,862
  35,485
  40,446
  45,738
  51,352
  57,282
  63,521
  70,066
  76,914
  84,064
  91,517
  99,277
  107,350
  115,743
  124,466
  133,531
  142,951
  152,742
  162,921
  173,508
  184,522
  195,987
  207,926
  220,366
  233,333
  246,857
Revenue / Adjusted assets
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
Average production assets, $m
  5,236
  6,382
  7,671
  9,105
  10,682
  12,401
  14,258
  16,252
  18,378
  20,634
  23,017
  25,524
  28,153
  30,905
  33,778
  36,773
  39,891
  43,135
  46,507
  50,012
  53,654
  57,439
  61,374
  65,464
  69,717
  74,143
  78,750
  83,547
  88,546
  93,756
  99,190
Working capital, $m
  4,116
  3,102
  3,729
  4,426
  5,192
  6,028
  6,930
  7,899
  8,933
  10,029
  11,188
  12,406
  13,685
  15,022
  16,418
  17,874
  19,390
  20,966
  22,606
  24,309
  26,080
  27,919
  29,832
  31,820
  33,887
  36,039
  38,278
  40,610
  43,039
  45,572
  48,213
Total debt, $m
  4,357
  5,208
  6,865
  8,706
  10,731
  12,938
  15,323
  17,883
  20,614
  23,511
  26,570
  29,790
  33,167
  36,701
  40,390
  44,236
  48,240
  52,406
  56,736
  61,238
  65,915
  70,776
  75,828
  81,080
  86,543
  92,226
  98,142
  104,303
  110,722
  117,413
  124,391
Total liabilities, $m
  7,344
  8,195
  9,852
  11,693
  13,718
  15,925
  18,310
  20,870
  23,601
  26,498
  29,557
  32,777
  36,154
  39,688
  43,377
  47,223
  51,227
  55,393
  59,723
  64,225
  68,902
  73,763
  78,815
  84,067
  89,530
  95,213
  101,129
  107,290
  113,709
  120,400
  127,378
Total equity, $m
  7,880
  7,687
  9,241
  10,968
  12,867
  14,937
  17,175
  19,576
  22,137
  24,854
  27,724
  30,744
  33,912
  37,226
  40,687
  44,294
  48,050
  51,957
  56,020
  60,242
  64,629
  69,188
  73,927
  78,854
  83,978
  89,309
  94,858
  100,636
  106,657
  112,933
  119,479
Total liabilities and equity, $m
  15,224
  15,882
  19,093
  22,661
  26,585
  30,862
  35,485
  40,446
  45,738
  51,352
  57,281
  63,521
  70,066
  76,914
  84,064
  91,517
  99,277
  107,350
  115,743
  124,467
  133,531
  142,951
  152,742
  162,921
  173,508
  184,522
  195,987
  207,926
  220,366
  233,333
  246,857
Debt-to-equity ratio
  0.553
  0.680
  0.740
  0.790
  0.830
  0.870
  0.890
  0.910
  0.930
  0.950
  0.960
  0.970
  0.980
  0.990
  0.990
  1.000
  1.000
  1.010
  1.010
  1.020
  1.020
  1.020
  1.030
  1.030
  1.030
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
Adjusted equity ratio
  0.438
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  796
  279
  344
  415
  493
  577
  667
  764
  866
  975
  1,089
  1,358
  1,483
  1,614
  1,750
  1,892
  2,040
  2,193
  2,352
  2,518
  2,690
  2,869
  3,055
  3,248
  3,449
  3,658
  3,876
  4,103
  4,340
  4,587
  4,844
Depreciation, amort., depletion, $m
  687
  807
  929
  1,064
  1,213
  1,375
  1,550
  1,738
  1,939
  2,152
  2,377
  2,408
  2,656
  2,916
  3,187
  3,469
  3,763
  4,069
  4,387
  4,718
  5,062
  5,419
  5,790
  6,176
  6,577
  6,995
  7,429
  7,882
  8,353
  8,845
  9,358
Funds from operations, $m
  1,758
  1,086
  1,273
  1,479
  1,706
  1,952
  2,218
  2,502
  2,805
  3,127
  3,465
  3,766
  4,139
  4,530
  4,937
  5,361
  5,803
  6,262
  6,740
  7,236
  7,752
  8,288
  8,845
  9,424
  10,026
  10,653
  11,305
  11,985
  12,693
  13,432
  14,202
Change in working capital, $m
  20
  557
  627
  697
  767
  835
  903
  969
  1,034
  1,097
  1,158
  1,219
  1,278
  1,337
  1,396
  1,456
  1,516
  1,577
  1,639
  1,704
  1,770
  1,840
  1,912
  1,988
  2,068
  2,151
  2,239
  2,332
  2,430
  2,533
  2,641
Cash from operations, $m
  1,738
  529
  646
  782
  939
  1,117
  1,315
  1,533
  1,772
  2,030
  2,307
  2,547
  2,861
  3,192
  3,540
  3,905
  4,287
  4,686
  5,101
  5,532
  5,981
  6,448
  6,932
  7,436
  7,959
  8,502
  9,066
  9,653
  10,264
  10,899
  11,560
Maintenance CAPEX, $m
  0
  -494
  -602
  -724
  -859
  -1,008
  -1,170
  -1,345
  -1,533
  -1,734
  -1,947
  -2,171
  -2,408
  -2,656
  -2,916
  -3,187
  -3,469
  -3,763
  -4,069
  -4,387
  -4,718
  -5,062
  -5,419
  -5,790
  -6,176
  -6,577
  -6,995
  -7,429
  -7,882
  -8,353
  -8,845
New CAPEX, $m
  -605
  -1,146
  -1,290
  -1,434
  -1,577
  -1,719
  -1,858
  -1,993
  -2,126
  -2,256
  -2,383
  -2,507
  -2,630
  -2,751
  -2,873
  -2,995
  -3,118
  -3,244
  -3,372
  -3,505
  -3,642
  -3,785
  -3,934
  -4,090
  -4,254
  -4,426
  -4,607
  -4,797
  -4,998
  -5,210
  -5,434
Cash from investing activities, $m
  -1,025
  -1,640
  -1,892
  -2,158
  -2,436
  -2,727
  -3,028
  -3,338
  -3,659
  -3,990
  -4,330
  -4,678
  -5,038
  -5,407
  -5,789
  -6,182
  -6,587
  -7,007
  -7,441
  -7,892
  -8,360
  -8,847
  -9,353
  -9,880
  -10,430
  -11,003
  -11,602
  -12,226
  -12,880
  -13,563
  -14,279
Free cash flow, $m
  713
  -1,111
  -1,246
  -1,375
  -1,497
  -1,610
  -1,713
  -1,805
  -1,888
  -1,960
  -2,022
  -2,131
  -2,177
  -2,215
  -2,248
  -2,276
  -2,300
  -2,321
  -2,341
  -2,360
  -2,379
  -2,399
  -2,421
  -2,444
  -2,471
  -2,501
  -2,535
  -2,573
  -2,617
  -2,665
  -2,719
Issuance/(repayment) of debt, $m
  -33
  1,469
  1,656
  1,841
  2,025
  2,207
  2,385
  2,560
  2,730
  2,897
  3,060
  3,220
  3,377
  3,533
  3,689
  3,846
  4,004
  4,166
  4,331
  4,501
  4,677
  4,861
  5,052
  5,252
  5,463
  5,683
  5,916
  6,161
  6,419
  6,691
  6,978
Issuance/(repurchase) of shares, $m
  11
  1,106
  1,210
  1,312
  1,407
  1,493
  1,570
  1,637
  1,695
  1,743
  1,781
  1,662
  1,684
  1,700
  1,710
  1,715
  1,716
  1,714
  1,710
  1,704
  1,697
  1,691
  1,684
  1,679
  1,675
  1,673
  1,673
  1,675
  1,681
  1,690
  1,702
Cash from financing (excl. dividends), $m  
  -133
  2,575
  2,866
  3,153
  3,432
  3,700
  3,955
  4,197
  4,425
  4,640
  4,841
  4,882
  5,061
  5,233
  5,399
  5,561
  5,720
  5,880
  6,041
  6,205
  6,374
  6,552
  6,736
  6,931
  7,138
  7,356
  7,589
  7,836
  8,100
  8,381
  8,680
Total cash flow (excl. dividends), $m
  587
  1,464
  1,620
  1,778
  1,935
  2,091
  2,243
  2,392
  2,538
  2,680
  2,819
  2,750
  2,885
  3,018
  3,152
  3,285
  3,421
  3,558
  3,700
  3,845
  3,996
  4,152
  4,316
  4,487
  4,666
  4,855
  5,054
  5,263
  5,483
  5,716
  5,961
Retained Cash Flow (-), $m
  -402
  -1,385
  -1,554
  -1,727
  -1,900
  -2,070
  -2,237
  -2,401
  -2,561
  -2,717
  -2,870
  -3,020
  -3,168
  -3,314
  -3,460
  -3,607
  -3,756
  -3,907
  -4,062
  -4,222
  -4,387
  -4,559
  -4,739
  -4,927
  -5,124
  -5,331
  -5,549
  -5,779
  -6,021
  -6,276
  -6,546
Prev. year cash balance distribution, $m
 
  1,578
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,657
  67
  51
  36
  20
  6
  -9
  -23
  -37
  -51
  -270
  -283
  -296
  -309
  -322
  -335
  -349
  -363
  -377
  -392
  -407
  -423
  -440
  -457
  -476
  -495
  -516
  -538
  -560
  -584
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  1,589
  61
  44
  29
  16
  4
  -6
  -15
  -21
  -27
  -128
  -121
  -113
  -104
  -95
  -85
  -76
  -67
  -58
  -50
  -42
  -35
  -29
  -23
  -19
  -14
  -11
  -8
  -6
  -4
Current shareholders' claim on cash, %
  100
  92.5
  86.3
  81.0
  76.5
  72.6
  69.2
  66.3
  63.8
  61.6
  59.6
  58.0
  56.6
  55.3
  54.1
  53.1
  52.2
  51.3
  50.6
  49.9
  49.2
  48.7
  48.1
  47.6
  47.2
  46.7
  46.3
  46.0
  45.6
  45.3
  45.0

Nucor Corporation (Nucor) manufactures steel and steel products. The Company produces direct reduced iron (DRI) for use in its steel mills. It operates in three segments: steel mills, steel products and raw materials. The steel mills segment produces and distributes sheet steel (hot-rolled, cold-rolled and galvanized), plate steel, structural steel (wide-flange beams, beam blanks, H-piling and sheet piling) and bar steel (blooms, billets, concrete reinforcing bar, merchant bar, wire rod and special bar quality). The steel products segment produces steel joists and joist girders, steel deck, fabricated concrete reinforcing steel and cold finished steel. The raw materials produces DRI; brokers ferrous and nonferrous metals, pig iron, HBI and DRI; supplies ferro-alloys, and processes ferrous and nonferrous scrap metal. It also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron (HBI) and DRI.

FINANCIAL RATIOS  of  Nucor (NUE)

Valuation Ratios
P/E Ratio 21.4
Price to Sales 1.1
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 9.8
Price to Free Cash Flow 15
Growth Rates
Sales Growth Rate -1.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 61.8%
Cap. Spend. - 3 Yr. Gr. Rate -12.8%
Financial Strength
Quick Ratio 4
Current Ratio 0.1
LT Debt to Equity 47.4%
Total Debt to Equity 55.3%
Interest Coverage 8
Management Effectiveness
Return On Assets 6.2%
Ret/ On Assets - 3 Yr. Avg. 4.3%
Return On Total Capital 6.6%
Ret/ On T. Cap. - 3 Yr. Avg. 4.3%
Return On Equity 10.4%
Return On Equity - 3 Yr. Avg. 6.7%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 12.6%
Gross Margin - 3 Yr. Avg. 9.4%
EBITDA Margin 13.4%
EBITDA Margin - 3 Yr. Avg. 10%
Operating Margin 8.9%
Oper. Margin - 3 Yr. Avg. 5.9%
Pre-Tax Margin 8%
Pre-Tax Margin - 3 Yr. Avg. 5%
Net Profit Margin 4.9%
Net Profit Margin - 3 Yr. Avg. 2.9%
Effective Tax Rate 30.7%
Eff/ Tax Rate - 3 Yr. Avg. 27.7%
Payout Ratio 60.4%

NUE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NUE stock intrinsic value calculation we used $16208 million for the last fiscal year's total revenue generated by Nucor. The default revenue input number comes from 2016 income statement of Nucor. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NUE stock valuation model: a) initial revenue growth rate of 21.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for NUE is calculated based on our internal credit rating of Nucor, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Nucor.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NUE stock the variable cost ratio is equal to 97.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NUE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.2% for Nucor.

Corporate tax rate of 27% is the nominal tax rate for Nucor. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NUE stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NUE are equal to 32.3%.

Life of production assets of 10.6 years is the average useful life of capital assets used in Nucor operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NUE is equal to 15.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $7880 million for Nucor - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 320.051 million for Nucor is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Nucor at the current share price and the inputted number of shares is $17.1 billion.

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COMPANY NEWS

▶ Nucor Is a 'Pounding the Table' Buy, Jim Cramer Says   [Sep-19-17 09:03AM  TheStreet.com]
▶ Steel Maker Cites 'Slow' Trump Help For Earnings Warning   [Sep-15-17 04:00PM  Investor's Business Daily]
▶ [$$] Nucor Cuts Guidance, Citing Steel Imports   [11:41AM  The Wall Street Journal]
▶ Nucor's stock falls after profit warning   [09:27AM  MarketWatch]
▶ Nucor Announces 178th Consecutive Cash Dividend   [Sep-14-17 03:36PM  PR Newswire]
▶ This Just In: Nucor Stock Upgraded   [12:30PM  Motley Fool]
▶ This Could Drive U.S. Steels 2018 Performance   [07:37AM  Market Realist]
▶ Behind U.S. Steels Price-to-Earnings Ratio among Peers   [Sep-12-17 09:07AM  Market Realist]
▶ Should US Steelmakers Stop Bashing China?   [09:08AM  Market Realist]
▶ How Safe Is Nucor's Dividend?   [07:11AM  Motley Fool]
▶ These 3 Stocks Are Undeniably Cheap   [Sep-09-17 11:31AM  Motley Fool]
▶ What Challenges Could AK Steel Face in 4Q17?   [Sep-06-17 10:37AM  Market Realist]
▶ 3 Unknown but Amazing Dividend Stocks   [Aug-29-17 09:57PM  Motley Fool]
▶ Chinese Steel Demand: What Recent Indicators Tell Us   [Aug-28-17 10:36AM  Market Realist]
▶ 3 Dividend Stocks That Are Minting Money   [Aug-27-17 11:20AM  Motley Fool]
▶ U.S. Steel: Catch Up Time!   [01:44PM  Barrons.com]
▶ Dividend Yield of Nucor   [Aug-23-17 12:42PM  Market Realist]
▶ Comparing Nucor and Steel Dynamics Interest Coverage Ratio   [Aug-22-17 09:27AM  Market Realist]
▶ Are the Markets Getting a Little Bearish on US Steel?   [Aug-21-17 10:35AM  Market Realist]
▶ Section 232 Probe: Has Nucor Toned Down Its Expectations?   [Aug-18-17 07:37AM  Market Realist]
▶ How Does Chinese Steel Demand Look in 2017?   [01:36PM  Market Realist]
▶ Cleveland-Cliffs' Management Charts a New Course   [Aug-15-17 10:33AM  Motley Fool]
▶ 3 Stocks for Retirees to Grow Their Nest Egg   [Aug-14-17 08:41PM  Motley Fool]
▶ 3 Top Dividend Stocks in Infrastructure Spending   [Aug-11-17 08:22AM  Motley Fool]
▶ Nucor to buy St. Louis-based steel bar manufacturer   [04:35PM  American City Business Journals]
▶ Why Nucor Generated Lower Cash Flow in 2Q17   [07:35AM  Market Realist]
▶ Its Raining Cash for U.S. Steel amid Strong Markets   [Aug-09-17 10:36AM  Market Realist]
▶ Nucor Corp. Value Analysis (NYSE:NUE) : August 8, 2017   [Aug-08-17 06:04PM  Capital Cube]
▶ How Nucor Sees Its Volumes Shaping Up in the Coming Months   [Aug-07-17 04:05PM  Market Realist]
▶ It may be time to get bullish on these steel stocks   [12:23PM  American City Business Journals]
▶ 3 Dividend Stocks for Shrewd Investors   [Aug-06-17 08:15AM  Motley Fool]
▶ 3 Top Dividend Aristocrats To Own Forever   [Aug-05-17 08:03AM  Motley Fool]
▶ Analysts View on Nucor after Its 2Q17 Earnings   [Aug-03-17 11:05AM  Market Realist]
▶ The Upside and Downside to U.S. Steels Earnings Guidance   [Aug-01-17 10:37AM  Market Realist]
▶ 4 Top Steel Stocks for a U.S. Infrastructure Expansion   [Jul-29-17 08:46AM  Motley Fool]
▶ What Were the Key Drivers of AK Steels 2Q17 Earnings?   [Jul-26-17 11:06AM  Market Realist]
Financial statements of NUE
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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