On May 28, 2026, we take a closer look at the discounted cash flow (DCF) analysis for Nucor Corp NUE. The company has shown impressive price performance, with a year-to-date increase of 51.6% and a remarkable 128.8% rise over the past year. Here are some key points to consider:
- DCF Earnings-based intrinsic value of $410.03 vs current price of $246.47 (margin of safety: 13.7%)
- DCF FCF-based intrinsic value of $26.74 vs current price (second opinion indicates significant overvaluation)
- GF Score™ of 92/100 suggests high reliability of the DCF inputs
What Is NUE Worth? DCF Earnings-Based Model
The DCF earnings-based model utilizes a two-stage approach to estimate the intrinsic value of Nucor Corp. The first stage accounts for high growth in earnings over the next ten years, while the second stage reflects a more stable growth rate thereafter. Below are the key assumptions used in this model:
| Parameter | Value |
|---|---|
| Current EPS (TTM, excl. non-recurring) | $9.14 |
| 10-Year Growth Rate | 25.4% |
| 10-Year Treasury Rate | 4.50% |
| Discount Rate (ceil(Treasury) + 6%) | 11% |
| Terminal Growth Rate | 4% |
In the first stage, we project the EPS to grow at 25.4% per year for the next ten years, which is then discounted at a rate of 11%. The resulting value from this growth stage is $189.93 per share. In the second stage, we assume a terminal growth rate of 4% for the following ten years, also discounted at 11%, yielding a terminal stage value of $220.10 per share. The summary of the calculations is as follows:
| Stage | Description | Value |
|---|---|---|
| Growth Stage (Years 1-10) | EPS growing at 25.4%, discounted at 11% | $189.93 |
| Terminal Stage (Years 11-20) | 4% terminal growth, discounted at 11% | $220.10 |
| Intrinsic Value | Growth + Terminal | $410.03 |
Comparing the current price of $246.47 with the intrinsic value of $285.59, we find that Nucor Corp is modestly undervalued, with a margin of safety of 13.7%. It is important to note that GuruFocus uses EPS excluding non-recurring items, as research indicates that stock prices correlate more closely with earnings than with free cash flow. For further details, you can visit the NUE DCF Calculator.
What Does the Free Cash Flow DCF Say?
In contrast to the earnings-based model, the free cash flow (FCF) DCF model estimates an intrinsic value of $26.74 for Nucor Corp. This significant discrepancy compared to the earnings-based model suggests that the two approaches do not agree on the valuation of the company. The FCF-based model indicates that Nucor is significantly overvalued, with a staggering margin of safety of -821.7%.
How Does GF Value™ Compare to the DCF Models?
The GF Value™ for Nucor Corp is calculated at $169.08, providing a third perspective on the company's valuation. GF Value™ is GuruFocus' proprietary measure derived from historical trading multiples, past business growth, and future performance estimates. When we consider all three models—the DCF earnings, DCF FCF, and GF Value™—we see that they do not align, with the DCF earnings model suggesting undervaluation, while the FCF model and GF Value™ indicate overvaluation. For more insights, visit the GF Value™ page.
What Does NUE's GF Score™ Tell Us?
The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have historically generated higher long-term returns (backtested from 2006 to 2021). Below is the breakdown of Nucor's GF Score™:
| Metric | Rating |
|---|---|
| GF Score™ | 92/100 |
| Financial Strength | 8/10 |
| Profitability | 9/10 |
| Growth | 9/10 |
| Valuation | 5/10 |
| Momentum | 9/10 |
Nucor Corp has a predictability rating of 1 out of 5 stars, indicating that the DCF model may be less reliable for this stock. For more information, visit the NUE stock page.
Key Assumptions and Limitations
It is crucial to recognize that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Furthermore, stocks with low predictability ratings, such as Nucor Corp, tend to produce less reliable DCF estimates. The terminal growth rate of 4% is a simplifying assumption that may not fully capture future performance.
What This Means for Investors
In synthesizing the insights from the three valuation models—DCF earnings, DCF FCF, and GF Value™—we find a mixed picture. The DCF earnings model suggests that Nucor Corp is modestly undervalued, while the DCF FCF model and GF Value™ indicate significant overvaluation. Overall, the consensus leans towards Nucor being overvalued. For the full DCF analysis, visit the NUE DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions
What is NUE's intrinsic value based on DCF?
earnings-based $285.59, FCF-based $26.74
Is NUE overvalued or undervalued?
Based on the DCF earnings model, NUE is modestly undervalued, while the DCF FCF model and GF Value™ suggest it is overvalued.
How reliable is the DCF model for NUE?
The predictability rank of 1 out of 5 indicates that the DCF model may be less reliable for NUE.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
