Nucor CorporationNUENYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $233.66 per share(market-calibrated)

+31.7%

Upside to Fair Value

Current

$177.40

Pure Model

$235.40

Fair Value

$233.66

Bull Case

$281.39

Bear Case

$188.36

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

1.11%

Calibrated Growth

1.96%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $235.40.

What's Driving This Ratingfor NUE

↓

CapEx normalizing toward maintenance

Historical CapEx is 7.62% of revenue (heavy investment phase). Model fades this to 4.00% by Year 10, freeing up ~$1.5B in annual FCF. This is the biggest driver of long-term cash flow improvement.

⚠

Analyst growth decelerates sharply

Revenue growth drops from 9.84% in Year 1 to -1.69% by Year 5 (per analyst consensus). That's below the 2.25% terminal rate, so growth re-accelerates in Years 6-10 — a generous assumption. This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $190.10/share (11.8x terminal FCF) while exit multiple gives $280.70/share (22.4x terminal FCF). The 14x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.25% growth is more conservative. The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 1.11% perpetual growth — 114bps below the model's 2.25%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 62.38% indicates efficient cash generation. FCF reaches $5.5B by Year 10 (13.26% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.77

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)12.46%

Cost of Debt

Pre-tax Cost of Debt2.57%

Tax Rate20.64%

After-tax Cost of Debt2.04%

Equity Weight (E/V)85.18%

Debt Weight (D/V)14.82%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (85.18% × 12.46%) + (14.82% × 2.04%)

= 10.91%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$35.7B	$38.6B	$40.4B	$40.0B	$41.7B
EBIT	$6.3B	$6.8B	$7.1B	$7.0B	$7.3B
Tax	$1.3B	$1.4B	$1.5B	$1.5B	$1.5B
NOPAT	$5.0B	$5.4B	$5.6B	$5.6B	$5.8B
+ Depreciation	$1.3B	$1.4B	$1.5B	$1.5B	$1.5B
- Capex	$2.7B	$2.6B	$2.4B	$2.1B	$1.7B
- Δ NWC	$526M	$212M	-$114M	-$7M	$151M
Free Cash Flow	$3.0B	$4.0B	$4.8B	$5.0B	$5.5B
Discount Factor	0.902	0.733	0.596	0.484	0.355
Present Value	$2.7B	$2.9B	$2.9B	$2.4B	$2.0B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$5.5B

Terminal Growth Rate2.25%

WACC10.91%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$65.3B

PV of Terminal Value$23.2B

Exit Multiple Method

Year 10 EBITDA$8.9B

Exit Multiple (EV/EBITDA)14.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$124.2B

PV of Terminal Value$44.1B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$25.5B

PV of Terminal Value$23.2B

Enterprise Value$48.7B

(-) Net Debt$4.9B

Equity Value$43.9B

Shares Outstanding231M

Price per Share$190.10

Exit Multiple Method

PV of Projected FCFs$25.5B

PV of Terminal Value$44.1B

Enterprise Value$69.6B

(-) Net Debt$4.9B

Equity Value$64.8B

Shares Outstanding231M

Price per Share$280.70

Pure Model Fair Value

$235.40

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
8.91%	$282.74	$287.81	$293.64	$300.42	$308.39
9.91%	$254.01	$257.63	$261.73	$266.40	$271.77
10.91%	$229.75	$232.42	$235.40	$238.74	$242.51
11.91%	$208.93	$210.94	$213.15	$215.62	$218.36
12.91%	$190.80	$192.35	$194.04	$195.89	$197.94

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$188.36

6.2% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 2.21

Base Case

$235.40

32.7% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.77

Bull Case

$281.39

58.6% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 1.50

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Basic Materials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth9.84%

Year 3 Revenue Growth3.46%

Year 5 Revenue Growth-1.69%

Year 7 Revenue Growth-0.11%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin17.60%

Tax Rate20.64%

Historical Capex / Rev7.62%

Terminal Capex / Rev4.00%

NWC / Revenue16.45%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 14x EV/EBITDA (Basic Materials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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