Nucor Gains 20% in 3 Months: How Should Investors Play the Stock?

Nucor Corporation NUE shares have gained 20.1% in the past three months, outperforming the Zacks Steel Producers industry’s rise of 13.6% and the S&P 500’s increase of 9%. While Nucor missed earnings estimates in the second quarter, it saw higher profits across its segments. Increased shipment volumes and higher average selling prices at Nucor’s sheet and plate mills drove earnings in the steel mill segment. Higher volumes contributed to a 5% rise in the top line, which topped estimates. Among its major U.S. steel-making peers, Steel Dynamics, Inc. STLD has lost 4.4% in the past three months, while Cleveland-Cliffs Inc. CLF has rallied 38.6%.Nucor’s 3-month Price Performance Image Source: Zacks Investment ResearchTechnical indicators show that NUE has been trading above the 50-day simple moving average (SMA) since June 2, 2025. The stock is also currently trading above its 200-day SMA. Following a golden crossover on July 30, 2025, the 50-day SMA is reading higher than the 200-day SMA, indicating a bullish trend.NUE Stock Trades Above 50-Day SMA Image Source: Zacks Investment ResearchLet’s take a look at NUE’s fundamentals to better analyze how to play the stock.Growth Projects to Aid Nucor StockNucor remains committed to boosting production capacity, which should drive profitable growth and strengthen its position as a low-cost producer. The company is executing a series of growth projects to tap significant end-market demand. Nucor is seeing strong demand from construction & infrastructure, military & defense, and energy end markets and has a healthy order backlog. The company has already commissioned some of its growth projects with Gallatin and Brandenburg mills, showing strong production and shipment performance. NUE is currently executing several major growth projects, including the Apple Grove, WV, sheet mill (the largest project), the Lexington, NC, rebar micro mill, and the galvanizing line at the Berkeley County sheet mill.The company has been focusing on growth through strategic acquisitions over the past several years. The recent acquisition of Southwest Data Products expanded its growing portfolio of solutions for data center customers. The buyout of Rytec Corporation will also allow Nucor to further expand beyond its core steelmaking businesses into related downstream businesses. Adding high-performance doors is expected to create cross-selling opportunities with other Nucor businesses and significantly expand its product portfolio for the commercial space.NUE’s Capital Allocation Backed by Robust Financial HealthNucor is maximizing its returns to shareholders by leveraging its strong balance sheet and cash flows. It ended second-quarter 2025 with strong liquidity of roughly $3.4 billion. The company amended and restated its revolving credit facility on March 11, 2025, to increase the borrowing capacity to $2.25 billion from $1.75 billion and extend its maturity date to March 11, 2030. Its long-term debt-to-capitalization is 23.7%, which is below Steel Dynamics’ 31.1% and Cleveland-Cliffs’ 56.1%.Nucor has returned around $13.2 billion to its shareholders through dividends and share repurchases since 2020. It returned $758 million to its shareholders through dividends and share repurchases in the first half of 2025. The company, in December 2024, raised its quarterly dividend to 55 cents per share from 54 cents. Nucor has increased its regular dividend for 52 straight years since it started paying dividends in 1973. It remains committed to returning at least 40% of annual net earnings to its shareholders.  NUE offers a dividend yield of 1.5% at the current stock price. Its payout ratio is 36% (a ratio below 60% is a good indicator that the dividend will be sustainable), with a five-year annualized dividend growth rate of 7.5%. Backed by strong financial health, the company's dividend is perceived to be safe and reliable.Retreating Steel Prices Cloud NUE’s ProspectsThe recent pullback in U.S. steel prices is a concern. The Trump administration's imposition of a 25% tariff on all steel imports into the United States in March 2025 led to a surge in benchmark hot-rolled coil (HRC) prices to a peak of nearly $950 per short ton. While the administration's early June doubling of steel tariffs to 50% and the consequent steel mill price hikes triggered only a temporary lift, it failed to effectively drive up HRC prices further to new highs as intended.Overall demand weakness and abundant steel mill output have put a pause on a sustained price rally, dragging HRC prices below the $800 per short ton level. The price retreat poses a headwind for U.S. steel producers, and a meaningful recovery is unlikely over the near term, given a well-supplied market and the persistent weakness in U.S. manufacturing.NUE’s Rising Earnings Estimates Reflect Positive SentimentThe Zacks Consensus Estimate for 2025 for NUE has been revised upward over the past 60 days. The consensus estimate for 2026 has also been revised up over the same time frame. Image Source: Zacks Investment ResearchNucor’s Valuation Looks StretchedNucor is currently trading at a forward 12-month earnings multiple of 14.88, a roughly 37.9% premium to the peer group average of 10.79X, and higher than its five-year median. Both NUE and Steel Dynamics currently have a Value Score of B, while Cleveland-Cliffs has a Value Score of D. NUE’s premium valuation may not present a compelling value proposition at these levels. Image Source: Zacks Investment ResearchFinal Thoughts: Hold NUE Stock for NowNucor benefits from its actions to expand its production capabilities and grow its business through strategic acquisitions. Its efforts to boost production capacity through several growth projects should drive profitability. Despite these positives, NUE remains exposed to the underlying challenges in the steel industry. The recent pullback in steel prices cast a pall on the company's prospects. Its stretched valuation also might not offer an attractive entry point at this time. Holding onto this Zacks Rank #3 (Hold) stock will be prudent for investors who already own it.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Higher. Faster. Sooner. Buy These Stocks NowA small number of stocks are primed for a breakout, and you have a chance to get in before they take off.At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We’ve combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month.You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days.Download the report free now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Steel Dynamics, Inc. (STLD): Free Stock Analysis Report Nucor Corporation (NUE): Free Stock Analysis Report Cleveland-Cliffs Inc. (CLF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks