Yahoo Finance Why Nucor Is Wall Street’s All-Season Favorite
What’s Wall Street Saying About the Steel Industry?
Nucor, the favorite
Previously, we saw Wall Street analysts’ consensus price estimates for United States Steel (X) and AK Steel (AKS). Analyst opinions on both these companies is a mix of “buys” and “sells.” However, of the 19 analysts surveyed by Bloomberg, none rates Nucor (NUE) a “sell.” Also, none of the analysts downgraded Nucor after its 4Q15 earnings release. In this part of the series, we’ll explore what makes Nucor Wall Street’s all-season favorite.
Strong balance sheet
Nucor (NUE) boasts a strong balance sheet and is the only US (VOO) steel company to carry an investment grade (BND) credit rating. While its other competitors are struggling to remain profitable, Nucor has a history of generating profits across the business cycle. Nucor also has a variable cost structure, which has helped the company remain profitable even under the current challenging operating environment.
Healthy dividend yield
The company’s healthy dividend yield of 3.8% is the icing on the company’s cake. Nucor has been raising its quarterly dividend for many years. Commercial Metals (CMC) also has a healthy dividend yield of 3.4%. In contrast, ArcelorMittal (MT) has suspended its annual dividend program to shore up its balance sheet. While MT has asked its shareholders for $3 billion to reduce its net debt, Nucor actually has a share repurchase program in the works.
Nucor’s industry-leading profit margins, financial strength, and healthy dividend yield make the stock Wall Street’s all-time favorite. You can find more about Nucor in our series Nucor’s Mighty Prospects during the Current Steel Industry Slowdown.
However, Nucor’s over-exposure to the non-residential construction sector might increase the company’s risk profile. This is where Steel Dynamics (STLD) scores a point, as we’ll see in the next part of the series.
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