Intrinsic value of Nucor - NUE

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$60.00

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$60.00

 
Intrinsic value

$4.60

 
Up/down potential

-92%

 
Rating

str. sell

 
Value-price divergence* premium content

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*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 19.0

 

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
  14.50
  13.55
  12.70
  11.93
  11.23
  10.61
  10.05
  9.54
  9.09
  8.68
  8.31
  7.98
  7.68
  7.41
  7.17
  6.96
  6.76
  6.58
  6.43
  6.28
  6.15
  6.04
  5.94
  5.84
  5.76
  5.68
  5.61
  5.55
  5.50
  5.45
Revenue, $m
  16,208
  18,558
  21,073
  23,748
  26,580
  29,566
  32,703
  35,989
  39,423
  43,007
  46,740
  50,625
  54,666
  58,866
  63,231
  67,766
  72,480
  77,380
  82,475
  87,775
  93,290
  99,032
  105,013
  111,246
  117,745
  124,524
  131,600
  138,988
  146,705
  154,770
  163,201
Variable operating expenses, $m
 
  18,064
  20,484
  23,059
  25,784
  28,657
  31,676
  34,839
  38,144
  41,592
  45,185
  48,718
  52,607
  56,649
  60,849
  65,214
  69,750
  74,465
  79,368
  84,469
  89,776
  95,302
  101,057
  107,056
  113,310
  119,834
  126,643
  133,753
  141,179
  148,940
  157,053
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
  18,064
  20,484
  23,059
  25,784
  28,657
  31,676
  34,839
  38,144
  41,592
  45,185
  48,718
  52,607
  56,649
  60,849
  65,214
  69,750
  74,465
  79,368
  84,469
  89,776
  95,302
  101,057
  107,056
  113,310
  119,834
  126,643
  133,753
  141,179
  148,940
  157,053
Operating income, $m
  1,442
  494
  588
  689
  796
  908
  1,026
  1,150
  1,280
  1,415
  1,555
  1,907
  2,059
  2,217
  2,382
  2,553
  2,730
  2,915
  3,107
  3,306
  3,514
  3,730
  3,955
  4,190
  4,435
  4,690
  4,957
  5,235
  5,526
  5,830
  6,147
EBITDA, $m
  2,129
  1,265
  1,436
  1,618
  1,811
  2,015
  2,228
  2,452
  2,686
  2,930
  3,185
  3,450
  3,725
  4,011
  4,308
  4,617
  4,939
  5,273
  5,620
  5,981
  6,357
  6,748
  7,155
  7,580
  8,023
  8,485
  8,967
  9,470
  9,996
  10,546
  11,120
Interest expense (income), $m
  183
  157
  198
  241
  288
  337
  388
  442
  499
  559
  621
  685
  752
  822
  895
  970
  1,049
  1,130
  1,215
  1,303
  1,394
  1,490
  1,589
  1,692
  1,800
  1,912
  2,030
  2,152
  2,280
  2,413
  2,552
Earnings before tax, $m
  1,299
  337
  391
  448
  508
  572
  638
  708
  780
  856
  935
  1,222
  1,307
  1,395
  1,487
  1,582
  1,682
  1,785
  1,892
  2,003
  2,120
  2,240
  2,366
  2,498
  2,635
  2,778
  2,927
  3,083
  3,246
  3,417
  3,595
Tax expense, $m
  399
  91
  105
  121
  137
  154
  172
  191
  211
  231
  252
  330
  353
  377
  401
  427
  454
  482
  511
  541
  572
  605
  639
  674
  711
  750
  790
  832
  876
  922
  971
Net income, $m
  796
  246
  285
  327
  371
  417
  466
  517
  570
  625
  682
  892
  954
  1,018
  1,086
  1,155
  1,228
  1,303
  1,381
  1,462
  1,547
  1,636
  1,728
  1,823
  1,923
  2,028
  2,137
  2,251
  2,370
  2,494
  2,624

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
  14,918
  16,940
  19,090
  21,367
  23,767
  26,288
  28,930
  31,691
  34,571
  37,572
  40,696
  43,944
  47,320
  50,828
  54,475
  58,264
  62,203
  66,298
  70,558
  74,992
  79,608
  84,416
  89,426
  94,650
  100,100
  105,788
  111,726
  117,930
  124,413
  131,190
Adjusted assets (=assets-cash), $m
  13,028
  14,918
  16,940
  19,090
  21,367
  23,767
  26,288
  28,930
  31,691
  34,571
  37,572
  40,696
  43,944
  47,320
  50,828
  54,475
  58,264
  62,203
  66,298
  70,558
  74,992
  79,608
  84,416
  89,426
  94,650
  100,100
  105,788
  111,726
  117,930
  124,413
  131,190
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
  5,994
  6,807
  7,671
  8,585
  9,550
  10,563
  11,624
  12,734
  13,891
  15,097
  16,352
  17,657
  19,014
  20,423
  21,889
  23,411
  24,994
  26,639
  28,351
  30,133
  31,987
  33,919
  35,932
  38,032
  40,221
  42,507
  44,893
  47,386
  49,991
  52,714
Working capital, $m
  4,116
  2,969
  3,372
  3,800
  4,253
  4,731
  5,232
  5,758
  6,308
  6,881
  7,478
  8,100
  8,747
  9,419
  10,117
  10,843
  11,597
  12,381
  13,196
  14,044
  14,926
  15,845
  16,802
  17,799
  18,839
  19,924
  21,056
  22,238
  23,473
  24,763
  26,112
Total debt, $m
  4,418
  4,712
  5,747
  6,848
  8,014
  9,243
  10,534
  11,886
  13,300
  14,775
  16,311
  17,910
  19,573
  21,302
  23,098
  24,965
  26,905
  28,922
  31,019
  33,200
  35,470
  37,833
  40,295
  42,860
  45,535
  48,325
  51,237
  54,278
  57,454
  60,773
  64,243
Total liabilities, $m
  7,344
  7,638
  8,673
  9,774
  10,940
  12,169
  13,460
  14,812
  16,226
  17,701
  19,237
  20,836
  22,499
  24,228
  26,024
  27,891
  29,831
  31,848
  33,945
  36,126
  38,396
  40,759
  43,221
  45,786
  48,461
  51,251
  54,163
  57,204
  60,380
  63,699
  67,169
Total equity, $m
  7,880
  7,280
  8,266
  9,316
  10,427
  11,598
  12,829
  14,118
  15,465
  16,871
  18,335
  19,859
  21,444
  23,092
  24,804
  26,584
  28,433
  30,355
  32,354
  34,433
  36,596
  38,849
  41,195
  43,640
  46,189
  48,849
  51,624
  54,523
  57,550
  60,713
  64,021
Total liabilities and equity, $m
  15,224
  14,918
  16,939
  19,090
  21,367
  23,767
  26,289
  28,930
  31,691
  34,572
  37,572
  40,695
  43,943
  47,320
  50,828
  54,475
  58,264
  62,203
  66,299
  70,559
  74,992
  79,608
  84,416
  89,426
  94,650
  100,100
  105,787
  111,727
  117,930
  124,412
  131,190
Debt-to-equity ratio
  0.561
  0.650
  0.700
  0.740
  0.770
  0.800
  0.820
  0.840
  0.860
  0.880
  0.890
  0.900
  0.910
  0.920
  0.930
  0.940
  0.950
  0.950
  0.960
  0.960
  0.970
  0.970
  0.980
  0.980
  0.990
  0.990
  0.990
  1.000
  1.000
  1.000
  1.000
Adjusted equity ratio
  0.442
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  796
  246
  285
  327
  371
  417
  466
  517
  570
  625
  682
  892
  954
  1,018
  1,086
  1,155
  1,228
  1,303
  1,381
  1,462
  1,547
  1,636
  1,728
  1,823
  1,923
  2,028
  2,137
  2,251
  2,370
  2,494
  2,624
Depreciation, amort., depletion, $m
  687
  771
  847
  929
  1,015
  1,106
  1,202
  1,302
  1,407
  1,516
  1,630
  1,543
  1,666
  1,794
  1,927
  2,065
  2,209
  2,358
  2,513
  2,675
  2,843
  3,018
  3,200
  3,390
  3,588
  3,794
  4,010
  4,235
  4,470
  4,716
  4,973
Funds from operations, $m
  1,755
  1,017
  1,133
  1,256
  1,386
  1,524
  1,668
  1,819
  1,976
  2,141
  2,312
  2,435
  2,620
  2,812
  3,012
  3,220
  3,436
  3,661
  3,894
  4,137
  4,390
  4,653
  4,927
  5,213
  5,511
  5,822
  6,147
  6,486
  6,840
  7,210
  7,597
Change in working capital, $m
  17
  376
  402
  428
  453
  478
  502
  526
  550
  573
  597
  622
  646
  672
  698
  726
  754
  784
  815
  848
  882
  919
  957
  997
  1,040
  1,085
  1,132
  1,182
  1,235
  1,290
  1,349
Cash from operations, $m
  1,738
  800
  730
  828
  933
  1,046
  1,166
  1,293
  1,427
  1,567
  1,715
  1,813
  1,973
  2,140
  2,314
  2,494
  2,682
  2,877
  3,079
  3,289
  3,508
  3,734
  3,970
  4,216
  4,472
  4,738
  5,015
  5,304
  5,605
  5,920
  6,248
Maintenance CAPEX, $m
  0
  -494
  -565
  -642
  -724
  -810
  -901
  -997
  -1,097
  -1,201
  -1,310
  -1,424
  -1,543
  -1,666
  -1,794
  -1,927
  -2,065
  -2,209
  -2,358
  -2,513
  -2,675
  -2,843
  -3,018
  -3,200
  -3,390
  -3,588
  -3,794
  -4,010
  -4,235
  -4,470
  -4,716
New CAPEX, $m
  -605
  -759
  -812
  -864
  -915
  -964
  -1,013
  -1,061
  -1,109
  -1,157
  -1,206
  -1,255
  -1,305
  -1,357
  -1,410
  -1,465
  -1,523
  -1,583
  -1,646
  -1,712
  -1,781
  -1,855
  -1,932
  -2,013
  -2,099
  -2,190
  -2,285
  -2,386
  -2,493
  -2,605
  -2,723
Cash from investing activities, $m
  -1,025
  -1,253
  -1,377
  -1,506
  -1,639
  -1,774
  -1,914
  -2,058
  -2,206
  -2,358
  -2,516
  -2,679
  -2,848
  -3,023
  -3,204
  -3,392
  -3,588
  -3,792
  -4,004
  -4,225
  -4,456
  -4,698
  -4,950
  -5,213
  -5,489
  -5,778
  -6,079
  -6,396
  -6,728
  -7,075
  -7,439
Free cash flow, $m
  713
  -453
  -648
  -678
  -705
  -728
  -748
  -765
  -779
  -791
  -802
  -866
  -874
  -882
  -890
  -897
  -906
  -915
  -925
  -936
  -949
  -963
  -979
  -997
  -1,017
  -1,040
  -1,065
  -1,092
  -1,123
  -1,155
  -1,191
Issuance/(repayment) of debt, $m
  -33
  973
  1,035
  1,101
  1,166
  1,229
  1,291
  1,353
  1,414
  1,475
  1,536
  1,599
  1,663
  1,729
  1,796
  1,867
  1,940
  2,017
  2,097
  2,181
  2,270
  2,363
  2,462
  2,565
  2,675
  2,790
  2,912
  3,041
  3,176
  3,319
  3,470
Issuance/(repurchase) of shares, $m
  11
  0
  599
  627
  651
  671
  688
  702
  713
  722
  730
  791
  796
  801
  805
  810
  815
  820
  826
  834
  842
  852
  864
  877
  892
  909
  928
  950
  974
  1,000
  1,028
Cash from financing (excl. dividends), $m  
  -133
  973
  1,634
  1,728
  1,817
  1,900
  1,979
  2,055
  2,127
  2,197
  2,266
  2,390
  2,459
  2,530
  2,601
  2,677
  2,755
  2,837
  2,923
  3,015
  3,112
  3,215
  3,326
  3,442
  3,567
  3,699
  3,840
  3,991
  4,150
  4,319
  4,498
Total cash flow (excl. dividends), $m
  587
  520
  387
  423
  460
  500
  543
  587
  634
  683
  735
  733
  789
  846
  907
  969
  1,034
  1,102
  1,172
  1,245
  1,321
  1,400
  1,483
  1,568
  1,657
  1,750
  1,847
  1,948
  2,054
  2,164
  2,279
Retained Cash Flow (-), $m
  -402
  -917
  -986
  -1,049
  -1,111
  -1,171
  -1,231
  -1,289
  -1,347
  -1,406
  -1,464
  -1,524
  -1,585
  -1,648
  -1,712
  -1,779
  -1,849
  -1,922
  -1,999
  -2,079
  -2,164
  -2,252
  -2,346
  -2,445
  -2,549
  -2,659
  -2,776
  -2,898
  -3,027
  -3,164
  -3,307
Prev. year cash balance distribution, $m
 
  1,517
  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
 
  1,120
  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
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
 
  1,074
  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
Current shareholders' claim on cash, %
  100
  100.0
  96.7
  93.8
  91.1
  88.8
  86.6
  84.7
  83.0
  81.4
  80.0
  78.6
  77.3
  76.1
  75.0
  74.0
  73.1
  72.2
  71.4
  70.7
  70.0
  69.3
  68.7
  68.1
  67.5
  66.9
  66.4
  65.9
  65.4
  65.0
  64.5

Nucor Corporation manufactures and sells steel and steel products in the United States and internationally. It operates through three segments: Steel Mills, Steel Products, and Raw Materials. The Steel Mills segment produces and distributes hot-rolled, cold-rolled, and galvanized sheet steel products; plate steel products; structural steel products comprising wide-flange beams, beam blanks, H-pilings, and sheet pilings; and bar steel products, such as blooms, billets, concrete reinforcing bars, merchant bars, and special bar quality products. This segment sells its products to steel service centers, fabricators, and manufacturers in automotive, energy, agricultural, heavy equipment, and transportation sectors. The Steel Products segment offers steel joists and joist girders, steel decks, fabricated concrete reinforcing and cold finished steel products, steel fasteners, metal building systems, steel gratings, and wire and wire mesh products to general contractors, fabricators, distributors, and manufacturers. Its products are used by contractors in constructing highways, bridges, reservoirs, utilities, hospitals, schools, airports, stadiums, and high-rise buildings. The Raw Materials segment produces direct reduced iron (DRI); brokers ferrous and nonferrous metals, pig iron, hot briquetted iron, and DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap metal, as well as holds working interest in natural gas drilling programs. This segment sells its ferrous scrap to electric arc furnace steel mills and foundries for use in manufacturing process; and nonferrous scrap metal to aluminum can producers, secondary aluminum smelters, steel mills, and other processors and consumers of various nonferrous metals. The company offers its products through its in-house sales forces, as well as internal distribution and trading companies. Nucor Corporation was founded in 1940 and is based in Charlotte, North Carolina.

FINANCIAL RATIOS  of  Nucor (NUE)

Valuation Ratios
P/E Ratio 24
Price to Sales 1.2
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 11
Price to Free Cash Flow 16.9
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 3
Current Ratio 0.1
LT Debt to Equity 47.4%
Total Debt to Equity 56.1%
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 14.5% 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 16%. 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 316.979 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 $19.0 billion.


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COMPANY NEWS

▶ 2 Cheap Dividend Stocks You Can Buy Right Now   [Apr-22-17 09:07AM  Motley Fool]
▶ Nucors 1Q17 Earnings: What You Need to Know   [12:30PM  Market Realist]
▶ Company News for April 21, 2017   [10:09AM  Zacks]
▶ Can Nucor Continue Its Winning Streak?   [08:02AM  Motley Fool]
▶ ETF Flyer: Trumped Up Steel?!   [Apr-20-17 04:57PM  Barrons.com]
▶ Trump Turbocharged Thursday's Top-Performing Stock Group   [04:31PM  Investor's Business Daily]
▶ Quarterly Earnings In Focus   [11:16AM  Zacks]
▶ Now That's a Steel Rally!   [11:05AM  Barrons.com]
▶ Nucor beats Street 1Q forecasts   [09:07AM  Associated Press]
▶ U.S. Steels 2017 Guidance: What Investors Should Expect   [Apr-19-17 10:37AM  Market Realist]
▶ Nucor seeks five-year PILOT on new, $8.1M Memphis investment   [Apr-17-17 02:15PM  American City Business Journals]
▶ Heres Why Nucors Profits Are Expected to Surge in 1Q17   [Apr-14-17 10:36AM  Market Realist]
▶ US Steel: Has the Trump Effect Run Its Course?   [Apr-13-17 12:35PM  Market Realist]
▶ Mining, Steel Stocks Melt As Iron Ore Price Crashes   [Apr-12-17 09:49AM  Investor's Business Daily]
▶ [$$] U.S. Steelmakers Press Their Luck With Price Increases   [12:19AM  The Wall Street Journal]
▶ How Do Analysts Rate Nucor This Earnings Season?   [Apr-10-17 12:35PM  Market Realist]
▶ Nucor Looks Bullish on the Charts   [08:46AM  TheStreet.com]
▶ [$$] U.S. Steelmakers Press Their Luck With Price Increases   [06:15AM  The Wall Street Journal]
▶ Bull of the Day: Nucor (NUE)   [Apr-07-17 05:41AM  Zacks]
▶ New Strong Buy Stocks for April 5th   [Apr-05-17 08:52AM  Zacks]
▶ Chinas Steel Production Rises amid Capacity Cuts   [Apr-03-17 10:37AM  Market Realist]
▶ Steel Stocks Rise Amid Commerce Department's Dumping Findings   [Mar-30-17 04:22PM  Investor's Business Daily]
▶ U.S. Steel: Go Oil, Go!   [12:07PM  Barrons.com]
▶ U.S. Steel: Go Oil, Go!   [12:07PM  at Barrons.com]
▶ 3 Stocks You Can Safely Own Until 2030   [Mar-25-17 08:20AM  at Motley Fool]
▶ Nucor upgrading 100-year-old Ohio plant   [Mar-23-17 02:10PM  at bizjournals.com]
▶ Nucor to Modernize Rolling Mill at its Ohio Bar Mill   [Mar-22-17 04:10PM  PR Newswire]
▶ 3 Value Stocks Senior Citizens Could Buy Right Now   [Mar-21-17 05:52PM  at Motley Fool]
Stock chart of NUE 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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