Intrinsic value of Nucor - NUE

Previous Close

$60.23

  Intrinsic Value

$4.58

stock screener

  Rating & Target

str. sell

-92%

  Value-price divergence*

-59%

Previous close

$60.23

 
Intrinsic value

$4.58

 
Up/down potential

-92%

 
Rating

str. sell

 
Value-price divergence*

-59%

*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 19.2

 

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
  29.60
  27.14
  24.93
  22.93
  21.14
  19.53
  18.07
  16.77
  15.59
  14.53
  13.58
  12.72
  11.95
  11.25
  10.63
  10.06
  9.56
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.77
  6.59
  6.43
  6.29
  6.16
Revenue, $m
  16,208
  21,006
  26,706
  33,363
  41,015
  49,685
  59,387
  70,120
  81,876
  94,641
  108,392
  123,109
  138,768
  155,348
  172,829
  191,197
  210,441
  230,556
  251,543
  273,407
  296,163
  319,829
  344,430
  369,995
  396,562
  424,171
  452,871
  482,712
  513,753
  546,055
  579,685
Variable operating expenses, $m
 
  20,420
  25,906
  32,312
  39,675
  48,019
  57,355
  67,684
  78,998
  91,281
  104,515
  118,472
  133,542
  149,497
  166,320
  183,996
  202,515
  221,872
  242,068
  263,109
  285,008
  307,782
  331,456
  356,058
  381,624
  408,194
  435,813
  464,530
  494,402
  525,487
  557,850
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
  20,420
  25,906
  32,312
  39,675
  48,019
  57,355
  67,684
  78,998
  91,281
  104,515
  118,472
  133,542
  149,497
  166,320
  183,996
  202,515
  221,872
  242,068
  263,109
  285,008
  307,782
  331,456
  356,058
  381,624
  408,194
  435,813
  464,530
  494,402
  525,487
  557,850
Operating income, $m
  1,442
  586
  801
  1,051
  1,340
  1,666
  2,032
  2,436
  2,879
  3,359
  3,877
  4,637
  5,227
  5,851
  6,510
  7,202
  7,927
  8,684
  9,475
  10,298
  11,155
  12,047
  12,973
  13,936
  14,937
  15,977
  17,058
  18,182
  19,351
  20,568
  21,835
EBITDA, $m
  2,129
  1,431
  1,820
  2,273
  2,795
  3,385
  4,047
  4,778
  5,579
  6,449
  7,386
  8,388
  9,455
  10,585
  11,776
  13,028
  14,339
  15,710
  17,140
  18,630
  20,180
  21,793
  23,469
  25,211
  27,021
  28,902
  30,858
  32,891
  35,006
  37,207
  39,499
Interest expense (income), $m
  183
  157
  240
  340
  456
  589
  740
  909
  1,096
  1,301
  1,523
  1,763
  2,019
  2,292
  2,581
  2,885
  3,205
  3,541
  3,891
  4,257
  4,638
  5,034
  5,446
  5,875
  6,320
  6,783
  7,264
  7,764
  8,284
  8,825
  9,387
Earnings before tax, $m
  1,299
  429
  560
  712
  884
  1,077
  1,291
  1,527
  1,783
  2,059
  2,354
  2,874
  3,208
  3,559
  3,929
  4,316
  4,721
  5,144
  5,584
  6,042
  6,518
  7,013
  7,527
  8,062
  8,617
  9,194
  9,794
  10,418
  11,067
  11,743
  12,447
Tax expense, $m
  399
  116
  151
  192
  239
  291
  349
  412
  481
  556
  636
  776
  866
  961
  1,061
  1,165
  1,275
  1,389
  1,508
  1,631
  1,760
  1,893
  2,032
  2,177
  2,327
  2,482
  2,644
  2,813
  2,988
  3,171
  3,361
Net income, $m
  796
  313
  409
  519
  645
  786
  943
  1,115
  1,301
  1,503
  1,719
  2,098
  2,342
  2,598
  2,868
  3,151
  3,446
  3,755
  4,076
  4,410
  4,758
  5,119
  5,495
  5,885
  6,290
  6,712
  7,150
  7,605
  8,079
  8,573
  9,086

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
  16,886
  21,468
  26,819
  32,970
  39,940
  47,739
  56,367
  65,817
  76,078
  87,132
  98,962
  111,550
  124,878
  138,930
  153,696
  169,165
  185,334
  202,205
  219,781
  238,073
  257,097
  276,873
  297,424
  318,779
  340,974
  364,044
  388,032
  412,985
  438,951
  465,985
Adjusted assets (=assets-cash), $m
  13,028
  16,886
  21,468
  26,819
  32,970
  39,940
  47,739
  56,367
  65,817
  76,078
  87,132
  98,962
  111,550
  124,878
  138,930
  153,696
  169,165
  185,334
  202,205
  219,781
  238,073
  257,097
  276,873
  297,424
  318,779
  340,974
  364,044
  388,032
  412,985
  438,951
  465,985
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
  6,785
  8,626
  10,776
  13,248
  16,048
  19,182
  22,649
  26,446
  30,569
  35,011
  39,764
  44,822
  50,177
  55,824
  61,757
  67,972
  74,470
  81,248
  88,311
  95,661
  103,305
  111,251
  119,508
  128,089
  137,007
  146,277
  155,916
  165,942
  176,376
  187,238
Working capital, $m
  4,116
  3,298
  4,193
  5,238
  6,439
  7,801
  9,324
  11,009
  12,855
  14,859
  17,018
  19,328
  21,787
  24,390
  27,134
  30,018
  33,039
  36,197
  39,492
  42,925
  46,498
  50,213
  54,075
  58,089
  62,260
  66,595
  71,101
  75,786
  80,659
  85,731
  91,011
Total debt, $m
  4,357
  5,726
  8,091
  10,852
  14,026
  17,622
  21,646
  26,098
  30,975
  36,269
  41,973
  48,078
  54,573
  61,450
  68,701
  76,320
  84,302
  92,646
  101,351
  110,420
  119,859
  129,675
  139,879
  150,484
  161,503
  172,955
  184,860
  197,238
  210,113
  223,512
  237,461
Total liabilities, $m
  7,344
  8,713
  11,078
  13,839
  17,013
  20,609
  24,633
  29,085
  33,962
  39,256
  44,960
  51,065
  57,560
  64,437
  71,688
  79,307
  87,289
  95,633
  104,338
  113,407
  122,846
  132,662
  142,866
  153,471
  164,490
  175,942
  187,847
  200,225
  213,100
  226,499
  240,448
Total equity, $m
  7,880
  8,173
  10,391
  12,981
  15,957
  19,331
  23,105
  27,281
  31,855
  36,822
  42,172
  47,898
  53,990
  60,441
  67,242
  74,389
  81,876
  89,702
  97,867
  106,374
  115,228
  124,435
  134,006
  143,953
  154,289
  165,031
  176,197
  187,808
  199,885
  212,452
  225,537
Total liabilities and equity, $m
  15,224
  16,886
  21,469
  26,820
  32,970
  39,940
  47,738
  56,366
  65,817
  76,078
  87,132
  98,963
  111,550
  124,878
  138,930
  153,696
  169,165
  185,335
  202,205
  219,781
  238,074
  257,097
  276,872
  297,424
  318,779
  340,973
  364,044
  388,033
  412,985
  438,951
  465,985
Debt-to-equity ratio
  0.553
  0.700
  0.780
  0.840
  0.880
  0.910
  0.940
  0.960
  0.970
  0.980
  1.000
  1.000
  1.010
  1.020
  1.020
  1.030
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
  1.040
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
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
  313
  409
  519
  645
  786
  943
  1,115
  1,301
  1,503
  1,719
  2,098
  2,342
  2,598
  2,868
  3,151
  3,446
  3,755
  4,076
  4,410
  4,758
  5,119
  5,495
  5,885
  6,290
  6,712
  7,150
  7,605
  8,079
  8,573
  9,086
Depreciation, amort., depletion, $m
  687
  845
  1,019
  1,222
  1,455
  1,719
  2,015
  2,342
  2,700
  3,089
  3,508
  3,751
  4,229
  4,734
  5,266
  5,826
  6,412
  7,025
  7,665
  8,331
  9,025
  9,746
  10,495
  11,274
  12,084
  12,925
  13,800
  14,709
  15,655
  16,639
  17,664
Funds from operations, $m
  1,758
  1,158
  1,428
  1,741
  2,100
  2,506
  2,958
  3,456
  4,001
  4,592
  5,227
  5,850
  6,570
  7,332
  8,135
  8,977
  9,859
  10,780
  11,741
  12,742
  13,783
  14,865
  15,990
  17,159
  18,374
  19,637
  20,949
  22,314
  23,734
  25,212
  26,750
Change in working capital, $m
  20
  753
  895
  1,045
  1,201
  1,361
  1,523
  1,685
  1,846
  2,004
  2,159
  2,311
  2,458
  2,603
  2,745
  2,884
  3,021
  3,158
  3,295
  3,433
  3,573
  3,716
  3,862
  4,014
  4,171
  4,335
  4,506
  4,685
  4,873
  5,071
  5,280
Cash from operations, $m
  1,738
  405
  533
  696
  899
  1,144
  1,435
  1,771
  2,156
  2,588
  3,068
  3,539
  4,112
  4,729
  5,390
  6,093
  6,838
  7,622
  8,446
  9,309
  10,210
  11,150
  12,128
  13,146
  14,203
  15,302
  16,444
  17,629
  18,861
  20,140
  21,471
Maintenance CAPEX, $m
  0
  -494
  -640
  -814
  -1,017
  -1,250
  -1,514
  -1,810
  -2,137
  -2,495
  -2,884
  -3,303
  -3,751
  -4,229
  -4,734
  -5,266
  -5,826
  -6,412
  -7,025
  -7,665
  -8,331
  -9,025
  -9,746
  -10,495
  -11,274
  -12,084
  -12,925
  -13,800
  -14,709
  -15,655
  -16,639
New CAPEX, $m
  -605
  -1,549
  -1,841
  -2,150
  -2,471
  -2,801
  -3,134
  -3,467
  -3,797
  -4,123
  -4,442
  -4,754
  -5,058
  -5,355
  -5,646
  -5,933
  -6,216
  -6,497
  -6,779
  -7,062
  -7,350
  -7,644
  -7,946
  -8,258
  -8,581
  -8,918
  -9,270
  -9,639
  -10,026
  -10,434
  -10,862
Cash from investing activities, $m
  -1,025
  -2,043
  -2,481
  -2,964
  -3,488
  -4,051
  -4,648
  -5,277
  -5,934
  -6,618
  -7,326
  -8,057
  -8,809
  -9,584
  -10,380
  -11,199
  -12,042
  -12,909
  -13,804
  -14,727
  -15,681
  -16,669
  -17,692
  -18,753
  -19,855
  -21,002
  -22,195
  -23,439
  -24,735
  -26,089
  -27,501
Free cash flow, $m
  713
  -1,638
  -1,949
  -2,268
  -2,589
  -2,906
  -3,213
  -3,505
  -3,778
  -4,030
  -4,258
  -4,517
  -4,698
  -4,855
  -4,990
  -5,106
  -5,204
  -5,287
  -5,358
  -5,419
  -5,471
  -5,519
  -5,564
  -5,607
  -5,652
  -5,700
  -5,752
  -5,809
  -5,875
  -5,948
  -6,031
Issuance/(repayment) of debt, $m
  -33
  1,987
  2,365
  2,761
  3,174
  3,596
  4,024
  4,452
  4,876
  5,294
  5,704
  6,104
  6,495
  6,877
  7,251
  7,619
  7,982
  8,343
  8,705
  9,069
  9,439
  9,816
  10,204
  10,604
  11,020
  11,452
  11,904
  12,378
  12,875
  13,399
  13,949
Issuance/(repurchase) of shares, $m
  11
  1,558
  1,809
  2,071
  2,332
  2,587
  2,832
  3,061
  3,273
  3,463
  3,632
  3,628
  3,751
  3,852
  3,933
  3,995
  4,041
  4,071
  4,089
  4,097
  4,096
  4,088
  4,076
  4,062
  4,046
  4,030
  4,016
  4,005
  3,998
  3,995
  3,998
Cash from financing (excl. dividends), $m  
  -133
  3,545
  4,174
  4,832
  5,506
  6,183
  6,856
  7,513
  8,149
  8,757
  9,336
  9,732
  10,246
  10,729
  11,184
  11,614
  12,023
  12,414
  12,794
  13,166
  13,535
  13,904
  14,280
  14,666
  15,066
  15,482
  15,920
  16,383
  16,873
  17,394
  17,947
Total cash flow (excl. dividends), $m
  587
  1,906
  2,225
  2,564
  2,916
  3,278
  3,643
  4,008
  4,371
  4,728
  5,078
  5,215
  5,549
  5,875
  6,194
  6,508
  6,819
  7,127
  7,436
  7,747
  8,063
  8,386
  8,717
  9,059
  9,413
  9,783
  10,169
  10,574
  10,999
  11,446
  11,916
Retained Cash Flow (-), $m
  -402
  -1,871
  -2,218
  -2,590
  -2,977
  -3,373
  -3,775
  -4,176
  -4,574
  -4,966
  -5,350
  -5,726
  -6,092
  -6,451
  -6,801
  -7,146
  -7,487
  -7,826
  -8,165
  -8,507
  -8,854
  -9,208
  -9,571
  -9,947
  -10,336
  -10,742
  -11,166
  -11,610
  -12,077
  -12,568
  -13,084
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
 
  1,614
  7
  -26
  -60
  -96
  -132
  -168
  -203
  -238
  -272
  -511
  -544
  -576
  -607
  -638
  -668
  -699
  -729
  -760
  -790
  -822
  -855
  -888
  -923
  -959
  -997
  -1,037
  -1,078
  -1,122
  -1,168
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
 
  1,547
  7
  -23
  -50
  -74
  -96
  -113
  -127
  -137
  -143
  -243
  -232
  -219
  -204
  -187
  -170
  -152
  -134
  -117
  -100
  -85
  -71
  -58
  -47
  -37
  -29
  -22
  -17
  -12
  -9
Current shareholders' claim on cash, %
  100
  90.8
  83.2
  76.9
  71.6
  67.1
  63.3
  60.0
  57.2
  54.8
  52.6
  50.8
  49.2
  47.8
  46.6
  45.5
  44.5
  43.6
  42.8
  42.1
  41.4
  40.8
  40.3
  39.8
  39.3
  38.9
  38.5
  38.2
  37.8
  37.5
  37.2

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 24.1
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 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 29.6% 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 318.075 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 $19.2 billion.

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COMPANY NEWS

▶ Nucor: Cramer's Top Takeaways   [08:16PM  TheStreet.com]
▶ Nucor CEO: US losing 'trade war' in steel   [06:49PM  CNBC Videos]
▶ 5 Lousy Dividend Aristocrats To Sell Now   [Jul-23-17 09:05AM  Forbes]
▶ Did U.S. Steel Burn Cash in 2Q17?   [09:12AM  Market Realist]
▶ Nucor misses Street 2Q forecasts   [12:21AM  Associated Press]
▶ Nucor Becomes Second Steelmaker To Miss Earnings Views In 2 Days   [Jul-20-17 04:03PM  Investor's Business Daily]
▶ Earnings rise for Nucor in second quarter, but miss mark   [02:40PM  American City Business Journals]
▶ Story Stocks from Briefing.com   [11:27AM  Briefing.com]
▶ How Are AK Steels 2Q17 Earnings Estimates?   [Jul-18-17 10:41AM  Market Realist]
▶ ETFs with exposure to Nucor Corp. : July 14, 2017   [Jul-14-17 03:55PM  Capital Cube]
▶ Steel Stocks Spike As Trump Says He's Mulling Steel 'Quotas And Tariffs'   [Jul-13-17 04:27PM  Investor's Business Daily]
▶ 3 Value Stocks for Smart Investors   [01:08PM  Motley Fool]
▶ Could Nucor Beat Expectations in 2Q17?   [10:38AM  Market Realist]
▶ Steel Stock With 258% EPS Growth Edges Closer To Breakout   [Jul-11-17 04:19PM  Investor's Business Daily]
▶ What to Expect from the Global Steel Industry   [Jul-10-17 03:35PM  Market Realist]
▶ Steel: Possible US Solution to a Global Issue   [12:05PM  Market Realist]
▶ What Expectations Are Cliffs and Its Peers Setting for 2H17?   [Jul-07-17 03:45PM  Market Realist]
▶ What a Delayed Import Probe Could Mean for US Steel   [Jul-06-17 10:37AM  Market Realist]
▶ Could US Steel Fall Prey to Geopolitics?   [09:09AM  Market Realist]
▶ Could the Steel Imports Probe Do More Harm than Good?   [Jul-03-17 02:05PM  Market Realist]
▶ Are Imports behind the Reversion in HRC-CRC Spreads?   [Jun-29-17 07:39AM  Market Realist]
▶ Could Rising Chinese Steel Prices Help US Steelmakers?   [Jun-28-17 10:37AM  Market Realist]
▶ U.S. Steel: No More Whack-a-Mole?   [10:02AM  Barrons.com]
▶ US Steel Imports Hit 2-Year High in May on Higher Spreads   [Jun-27-17 05:35PM  Market Realist]
▶ Nucor CEO Encouraged by Trump's Steel Stance   [12:53PM  Bloomberg Video]
▶ 3 Top Dividend Stocks on Sale   [11:37AM  Motley Fool]
▶ Steel stocks surge as speculation mounts on Wall Street   [11:10AM  American City Business Journals]
▶ ETFs with exposure to Nucor Corp. : June 26, 2017   [Jun-26-17 04:34PM  Capital Cube]
▶ Nucor Is Going to $60, Jim Cramer Says   [Jun-23-17 11:52AM  TheStreet.com]
▶ 3 Value Stocks for Recent College Graduates   [Jun-22-17 03:29PM  Motley Fool]
▶ U.S. Steel: Very Impressed?   [11:19AM  Barrons.com]
▶ Picks of Steel   [02:15PM  CNBC Videos]
▶ Steel Stocks Could Have Up to 50% Upside   [09:03AM  TheStreet.com]
▶ Cramer: Let's Remember Why We Like Tech   [Jun-15-17 07:01PM  TheStreet.com]
▶ The case for tech based on 2 shortfalls   [06:51PM  CNBC Videos]
▶ Stocks Pare Losses But Still Close Lower; Nike Drags Dow   [04:12PM  Investor's Business Daily]
▶ Sports, steel, toys & more in the blitz   [01:44PM  CNBC Videos]
▶ Cramer: Don't Panic Off the Fed   [12:15PM  TheStreet.com]
▶ Nucor's stock drops after profit warning   [09:14AM  MarketWatch]
▶ Steel Stocks Near Upside Breakout Points   [Jun-14-17 01:00PM  Investopedia]
▶ U.S. Steel: Here We Go Again?   [10:46AM  Barrons.com]
▶ Nucor Still Trying to Reach Trigger Level   [Jun-13-17 12:24PM  TheStreet.com]
Stock chart of NUE Financial statements of NUE Annual reports 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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