Nucor

Phase A — Understand the business

Lens 1 · Company Overview

Nucor is North America's largest steelmaker and largest recycler of any material — it melted ~20 million gross tons of scrap in 2025. It is a minimill / electric-arc-furnace (EAF) producer: it makes steel by melting recycled scrap (and scrap substitutes) in EAFs rather than reducing virgin iron ore in coal-fired blast furnaces. That single architectural choice drives the entire thesis — lower capital intensity, a highly variable cost base, faster cyclical throttle, and a materially lower carbon footprint than the integrated incumbents.

The company reports in three segments:

• Steel mills (62% of external sales in 2025) — sheet (hot-rolled, cold-rolled, galvanized), plate, structural (wide-flange beams, piling), and bar (rebar, merchant bar, SBQ). 15 bar mills, six sheet mills (incl. 51%-owned California Steel Industries), two structural mills (incl. 51% Nucor-Yamato, the only North American producer of high-strength low-alloy beams, branded AEOS®), three plate mills. Includes a 50% stake in NuMit (Steel Technologies, 30 sheet-processing plants). Sold ~19,848k tons to outside customers in 2025; ~85% of sheet is sold on contract (6–12 month, price-adjusting), the rest spot.
• Steel products — the higher-value-add, less-cyclical downstream: steel joists/deck (Vulcraft/Verco, #1 in the US), rebar fabrication (~70 facilities), tubular products, metal buildings, insulated metal panels (CENTRIA, Metl-Span), warehouse racking (incl. Southwest Data Products, acquired Apr 2024 for $115M to serve data centers), overhead doors (C.H.I. + Rytec, acquired Jul 2024 for $565M), and utility towers & structures (NTS). This is the "Expand Beyond" engine.
• Raw materials — vertical integration: The David J. Joseph Company (DJJ), the leading North American ferrous-scrap broker and a global metallics trader, six regional shredding operations (~6.8M tons/yr); two direct-reduced-iron (DRI) plants (Trinidad + Louisiana, ~3.3M metric tons in 2025) that give the mills a high-purity scrap substitute; plus captive natural-gas production (Colorado) and an industrial-gas business (Universal Industrial Gases, 10 plants operating).

Customers / concentration: Diversified — the largest single customer was ~5% of sales in 2025 and "consistently pays within terms". End markets: nonresidential construction (the largest), infrastructure, data centers, energy, automotive, agriculture, durable goods. ~33,000 teammates, largely non-union, principally US. HQ Charlotte, NC; Delaware corp incorporated 1958; NYSE: NUE; ~10,000 holders of record.

Contract structure / payment terms: Mostly spot-plus-contract on the mill side (sheet skews to price-adjusting contracts that pass scrap through); steel-products work is largely firm fixed-price competitively-bid construction contracts; raw-materials is mostly internal transfer (only ~7% of brokered/processed tons went to external customers in 2025). No take-or-pay dependence; the cyclicality is in price × volume, not contract cliffs.

Lens 2 · Supply Chain

Upstream → Nucor → end customer, naming the actual links:

• Inputs (upstream): Ferrous scrap is the single largest cost — ~1.1 tons of scrap per ton of steel, at an average $392/gross ton in 2025 (vs $394 in 2024; $403 in Q1 2026). Sourced through DJJ (its own shredders + a brokerage network of manufacturers, industrial plants, scrap dealers, auto wreckers, demolition firms, plus closed-loop programs with large customers for prime scrap). Scrap substitutes: captive DRI (Nu-Iron Trinidad, Nucor Steel Louisiana) + purchased pig iron (>2.0M gross tons in 2025, mostly overseas — historically Ukraine/Russia/Brazil, a geopolitical chokepoint Nucor explicitly cites and hedges via DRI). Energy: electricity (the defining EAF input) + natural gas (partially self-supplied via captive Colorado gas wells, an explicit hedge); industrial gases increasingly self-built (Universal Industrial Gases) as an alternative to long-term third-party contracts. Alloys / non-ferrous: traded through DJJ.
• The company: EAFs + continuous casting + automated rolling mills → mills → (21% of mill output flows internally to) the steel-products fabrication plants.
• Downstream (end customer): Steel service centers, fabricators, OEMs, and construction contractors across the US, Canada, Mexico; for steel products, directly to construction sites and builder-distributor networks. Internal trading/distribution companies (incl. Nucor Trading S.A., Skyline piling distribution) handle export and foundation distribution.

Chokepoints / single-source dependencies: (1) Scrap availability and price is the structural chokepoint — the bet of the whole raw-materials segment is to internalize it; risk rises as the EAF share of global steelmaking grows and prime scrap gets scarcer. (2) Pig iron import dependence on politically volatile regions — partially mitigated by DRI but not eliminated. (3) Electricity — a single critical-equipment or grid event at a mega-mill (e.g. the new WV sheet mill) is a concentrated operational risk. Net: Nucor's deliberate strategy is to own more of its own supply chain (DRI, scrap yards, gas, industrial gas) precisely to de-risk these chokepoints — this is a genuine differentiator vs peers that buy metallics on the open market.

Lens 3 · Competitive Advantages (moats)

1. Low-cost EAF position + variable cost base (the core moat). EAFs carry lower capital and fixed operating cost than integrated blast-furnace producers and flex down in a downturn instead of bleeding cash on a hot blast furnace. Nucor's pay-for-performance comp (profit-sharing that falls with profits) makes a chunk of labor cost variable too — so the trough is shallower than peers'.
2. Scale + breadth. Largest North American steelmaker; the leading domestic supplier in most product lines it serves (structural, merchant bar, joist/deck, metal buildings, piling, cold-finish bar, electrical conduit, insulated panels). Scale → freight/logistics advantage (micro-mills sited near regional demand), purchasing power in scrap via DJJ, and the ability to self-fund $3–4B/yr of capex through the cycle.
3. Vertical integration in metallics (DJJ + DRI + captive gas) — control over the largest input, a structurally shorter supply chain, and optionality on input mix that single-input competitors lack.
4. Balance-sheet moat. A-/A-/A3 — the highest credit ratings of any North-American-headquartered steel producer. This is a competitive weapon in a cyclical industry: Nucor buys, builds, and takes share when leveraged peers (e.g. Cleveland-Cliffs) are retrenching.
5. Culture / operating model. Decentralized, performance-driven, low-bureaucracy, deep internal-promotion bench — hard for a rival to replicate, and the source of Nucor's consistent best-in-class utilization and conversion costs.
6. Trade-policy moat (durable but exogenous). Section 232 (now 50%, no exemptions, ~600 derivatives) + 142 AD/CVD orders on Nucor's core lines structurally cap import competition — see Lens 8. Real and currently potent, but a policy moat, not a structural one (it can be modified or terminated).

Bargaining power: Strong over suppliers (fragmented scrap market; Nucor is often the price-setter and owns much of its own supply). Moderate over customers — steel is substantially a commodity, "we primarily compete on price and service" (the company's own words); the value-added "Expand Beyond" products (doors, panels, racking, towers) are the deliberate push toward pricing power and lower earnings volatility. Where it sells branded/spec'd product (AEOS® beams, ECONIQ™ net-zero steel, ELCYON® wind-tower plate), differentiation is real but a minority of the mix.

Lens 4 · Segments

segments.csv is empty; all figures sourced from the filings.

Net sales to external customers, FY ($M):

Earnings before income taxes by segment, FY ($M):

The trend and the cause: In 2025, steel mills re-accelerated (volumes +7%, metal margin up, operating rate 76%→83%) while steel products decelerated hard (EBT $1,596M → $1,229M) on a 6% drop in average selling price ($2,510 → $2,348/ton) and margin compression at joist/deck, metal buildings, and rebar fabrication — even as products volumes rose 9%. Raw materials nearly 4x'd EBT (helped by the absence of 2024's $83M note impairment + better DRI/DJJ results). So FY2025 was a mix rotation: the upstream mills bottomed and turned while the downstream products lagged a quarter or two.

Q1 2026 confirms the upstream inflection — segment EBT ($M): steel mills 1,128 (vs 231 a year prior — ~5x), steel products 285 (vs 288, ~flat — still margin-squeezed by higher input cost), raw materials 45 (vs 29). Total EBT $1,096M vs $285M. External sales $9,496M (+21% YoY): mills $6,036M (+23%), products $2,786M (+16%), raw materials $674M (+30%). The steel-mills segment is doing the heavy lifting; steel products is the lagging-but-recovering leg that management guides to improve in Q2 2026.

Geography: Operations and customers are overwhelmingly North America; meaningful foreign nodes are DRI in Trinidad, JVs in Mexico (NJSM galvanizing), Canada (rebar fab, Laurel Steel), and trading in Europe. The filings do not break out a clean revenue-by-geography table, so a precise geographic split is n/a beyond "most operations and customers are in North America".

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Phase B — Measure performance

Lens 5 · Earnings Result (latest print: Q1 2026, quarter ended April 4, 2026)

The most recent print is a major positive inflection:

• EPS $3.23 diluted (net earnings to Nucor $743M) vs $0.67 ($156M) in Q1 2025 — roughly 4.8x YoY. vs consensus: a ~14.5% beat.
• Revenue $9.50B, +21% YoY, ~7% above expectations.
• Gross margin $1.50B (16%) vs $605M (8%) a year prior — gross margin doubled in dollars and went 8%→16%.
• Driver: steel mills — record quarterly shipments, higher selling prices, expanded metal margin (selling price rose faster than the modest scrap increase to $403/gt), and lower conversion cost per ton from higher utilization (mills 86%, vs 80% Q1'25). Largest improvement at sheet mills.
• Margins/returns: net margin 7.8% (vs 2.0%); annualized ROE 14.0% (vs 3.1%) — back above a reasonable cost of equity.
• Balance-sheet flags: clean. CFO $886M (vs $364M); capex $661M → positive FCF (~+$225M) for the quarter, a flip from FY2025's negative-FCF capex peak. Current ratio 2.9. AR build used $463M of cash — demand-driven, not a red flag. Cash + ST investments $2.48B. Funded debt/total cap 24.0%, revolver undrawn.
• Guidance/outlook (management): "We expect higher consolidated earnings in Q2 2026, with improved earnings across all three operating segments" — mills (higher realized prices, stable volume), products (higher volume, stable price), raw materials (higher pricing). A guided sequential acceleration — tone clearly positive.
• Market reaction: stock +4.18% on the print. Notably modest given the size of the beat — a tell that the cyclical recovery was already substantially priced (see Lens 7/8).

Unusual vs own history: Profit-sharing expense jumped to $105M (Q1'26) from $31M (Q1'25) — mechanical, the variable-comp system scaling with profit; a feature, not a flag. $15M asset impairment in raw materials (immaterial).

Context — the cyclical arc (diluted EPS): 2021 $23.16 → 2022 $28.79 (all-time record) → 2023 $18.00 → 2024 $8.46 → 2025 $7.52 → Q1 2026 $3.23. The 2021–22 stimulus super-cycle was the anomaly; 2024–25 was the trough; 2026 is the recovery leg.

Lens 6 · Earnings Calls (sentiment trend)

Transcripts are not in the research layer (transcripts/ empty); this lens leans on the Q1 2026 release/call coverage + the filings' MD&A.

• Q1 2026 (May 2026): CEO Leon Topalian — "a strong start to 2026, with our steel mills segment achieving a new quarterly shipment record"; "all three of our operating segments reported sequential earnings growth, driven by strong demand across key end markets, growing contributions from recent capital investments, and federal trade policies that continue to reduce the flood of unfairly traded imports".
• Recurring themes (the things they keep saying): (1) trade enforcement working — import share 22%→15% YoY; (2) data centers as a demand driver for higher-margin engineered products (racking, towers, doors, conduit, joist/deck) — increasingly prominent; (3) "growing contributions from recent capital investments" — the WV/Brandenburg/Lexington/Arizona projects beginning to convert from start-up cost to earnings; (4) the disciplined capital-allocation refrain (40%+ return, strong balance sheet).
• Sentiment shift over time: The tone has moved from defensive through the 2024–25 trough ("modest demand," managing through low prices, absorbing pre-operating costs on greenfields) to confident/offensive in Q1 2026 (records, sequential acceleration, guiding up). The "things they stopped saying" are the trough-era hedges about soft pricing and import floods — replaced by record-shipment and margin-expansion language. Directionally bullish, and corroborated by the hard numbers (not just spin).

Lens 7 · Comps

5-yr average ROE: n/a as a precise figure for the peer set. For Nucor specifically, ROE has swung with the cycle — 8.5% (2025) and 9.8% (2024) up to ~14% annualized in Q1 2026, and far higher in the 2021–22 peak.

Read: Nucor and Steel Dynamics are the quality EAF pair and trade at a premium to integrated Cleveland-Cliffs — earned by lower leverage, better execution, and a more variable cost base. On ~$12.09 2026 consensus EPS, NUE is ~21x trailing / ~13–14x forward — a mid-cycle multiple on early-recovery earnings. Not screamingly cheap after a +118% run; the valuation case rests on the forward (normalized) number, not the trailing one.

Lens 8 · Stock-Price Catalysts (the >5% movers over ~5 years)

Mostly ``, cross-checked to the filings' earnings record.

• 2021–2022 super-cycle (up): Post-COVID stimulus + restocking drove record steel prices → record EPS ($23.16 in 2021, $28.79 in 2022) and a multi-year stock run. The single biggest fundamental driver of the era was HRC price, not company-specific news.
• 2022–2024 downcycle (down): Steel-price normalization → EPS fell $28.79 → $8.46. Quarterly prints that missed/guided down on pricing were the recurring >5% down-catalysts.
• June 2025 — Section 232 doubled to 50%, no exemptions: a structural up-catalyst for the whole domestic group; it widened the US-vs-import price gap (US HRC ~$1,070–1,200/st vs ~$571/mt SE Asia).
• May 2025 cyberattack: Nucor disclosed a network-security incident that briefly halted some production. A short-lived operational scare, not a lasting driver.
• Q1 2026 print (May 11, 2026): +4.18% on a 14.5% EPS beat — and the stock made an all-time high (~$270.90) on June 15, 2026.
• Trailing-12-month return: +118.6% vs SPY +28.8%.

What the pattern reveals: This name trades on the steel price / the cycle / trade policy far more than on idiosyncratic execution. The market reacts to (1) HRC and scrap spreads, (2) Section 232 / AD-CVD headlines, and (3) the read-through from prints to where in the cycle we are. The muted +4% on a big Q1 beat says the recovery is now consensus — the next leg has to come from the durability of the new price floor and the growth-project earnings, not from surprise.

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Phase C — Judge people & books

Lens 9 · Management

• Leon Topalian (57) — Chair & CEO. CEO since Jan 2020, Chair since Sept 2022. A lifer: joined Nucor in 1996 as a project engineer at Berkeley, rose through cold-mill supervisor, GM of Kankakee and Nucor-Yamato, EVP of Beam & Plate, President. The archetypal Nucor internally-promoted operator. Track record: steered the company through the record 2021–22 cycle and the 2024–25 trough while executing the largest capex program in its history and the "Expand Beyond" diversification — without cracking the A- balance sheet. Disciplined capital allocator (see below).
• CFO succession in motion: Stephen Laxton (55) — CFO/EVP since March 2022 — became President & COO in January 2026 and continued as CFO until March 1, 2026. This is a clear CEO-successor grooming. A new CFO assumes the seat in 2026 (not named in the on-disk filings — track it). David Sumoski, COO since 2021, stepped down as COO Jan 2026 and retires June 2026 — an orderly, telegraphed transition.
• Tenure & skin in the game: The entire EVP bench is long-tenure internal promotions (Behr 1996, Hollatz 1999, Needham 2000, Query 1990, etc.) — a deep, culture-soaked operating bench. Precise insider-ownership % is n/a (insider-transactions.csv absent; not quantified in the on-disk filings); SBC is strikingly low for the size ($56M FY2025; RSU expense $16M in Q1'26) — comp is cash-and-performance-share driven, not option-dilution driven, which aligns well.
• Capital-allocation history (the strongest part of the case): A balanced, through-cycle framework — invest for growth, return ≥40% of net earnings, defend the balance sheet. Execution: returned ~73% of net income over the last 3 years; dividend raised every year since 1973 (a 50+ year aristocrat; 212th consecutive quarterly dividend declared Feb 2026, $2.20/share in 2025); buybacks sized counter-cyclically and disciplined — $1.55B (2023), $2.22B (2024), cut to $700M (2025) to fund the capex peak while protecting the rating, with a fresh $4.0B authorization approved Feb 20, 2026. ~$9.73B invested over three years (91% capex, 9% M&A) into value-added growth (WV sheet mill, Brandenburg plate, micro mills, doors/panels/racking/towers). ROE 8.5%/9.8% in the trough → 14% annualized in Q1'26.
• Red flags: Minor — two related-party notes: CEO Topalian and EVP Query are married to sisters; EVP-bench is heavily insider (a governance-optics point, not a deal-breaker, and arguably the source of the culture moat). No promotional behavior; conservative accounting; "simple capital structure, no off-balance-sheet arrangements".
• Archetype: Professional-manager stewards of a founder-built (Ken Iverson) culture — disciplined operators, not empire-builders. The right archetype for a capital-intensive cyclical.

Lens 10 · Forensic Red Flags

Acting as a forensic equity analyst. Nucor screens clean — this is a conservatively-accounted business.

• Revenue recognition: Spot + price-adjusting contracts + fixed-price construction; no unusual channel-stuffing or bill-and-hold signals. Backlog rising (steel mills $3.35B vs $2.13B; steel products $4.46B vs $4.02B YoY) — demand-led, supportive of revenue quality.
• Cash flow vs earnings: Tracks tightly. FY2025 CFO $3,234M against net earnings to all interests $2,038M (capex-heavy but clean accruals); the FY2025 working-capital outflow of $636M was AR (+$428M) and inventory (+$366M) building on rising volume/price — demand-driven, not stuffing. AR turns ~5 weeks, inventory ~10 weeks — stable YoY, no receivables/inventory blow-out.
• Stock-based comp: Low ($56M FY2025) — non-GAAP is not materially flattered by SBC. The adjusted-vs-GAAP EPS gap is small ($7.71 adj vs $7.52 GAAP 2025 ).
• Goodwill/intangibles: ~$4.30B goodwill + $2.88B other intangibles ≈ 20% of $35.1B assets — from the "Expand Beyond" M&A (C.H.I., Rytec, Summit, SWDP). No impairment taken on the big deals; worth monitoring if the downstream products cycle stays soft, but currently supported by segment earnings.
• Leases / related parties / contingencies: "Simple capital structure, no off-balance-sheet arrangements." Related-party items limited to the family ties noted in Lens 9. JV minority interests (Nucor-Yamato, CSI, NJSM — all 51% owned) are consolidated with NCI cleanly disclosed.
• Impairments: Small and routine ($67M FY2025, $15M Q1'26) — facility closures/repurposing, not a write-down of a strategic bet.

Regulatory findings (required sub-section):

• SEC LR / AAER: None. Zero Litigation Releases and zero AAERs naming Nucor in the 2021-06-18 → 2026-06-18 window.
• 10-K Item 3 (Legal Proceedings): Only one named matter above the $1.0M S-K threshold — a Clean Air Act allegation at Nucor Steel Louisiana (St. James Parish DRI plant) received from the EPA in 2022; a combined settlement is being negotiated with DOJ/EPA/Louisiana DEQ, and "we do not believe that any aggregate settlement … will be material". Otherwise only ordinary-course litigation, none individually or in aggregate expected to be material.
• Non-SEC enforcement (web): (1) A June 2023 data breach led to a class-action settlement, with final approval scheduled Jan 13, 2025 — immaterial. (2) A May 2025 cybersecurity/network incident briefly disrupted some operations — disclosed, no lasting financial impact found. (3) An ancient 2001 EPA multimedia consent decree ($9M civil penalty) — historical, not relevant to the current thesis. No FTC, DOJ antitrust, or CFPB actions found.
• Verdict: No material regulatory or accounting red flags — verified via SEC EDGAR EFTS (LR, AAER), 10-K Item 3, and web search as of 2026-06-18.

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Phase D — Project & stress-test

Lens 11 · Forward Projection (FY2026 / FY2027 / FY2028 EPS)

Built bottom-up from the latest actuals + the Q1 2026 run-rate + management's Q2-up guidance. The base is anchored to Street consensus where sourced; bull/bear flex the steel-price and volume assumptions. No forecast.ts create is logged (watchlist/unattended rule).

Anchor facts: Q1 2026 EPS $3.23; management guides Q2 2026 up across all three segments; ~228M diluted shares with a $4.0B buyback authorization (~7% of cap) as a tailwind to per-share figures; FY2026 capex guided ~$2.50B (down from $3.42B) → FCF inflects positive; effective tax 20–22%. WV sheet mill (~3.0M tons, ~$4B) completes end-2026 → 2027–28 volume; Brandenburg plate, Lexington micro-mill, Arizona melt shop, NTS facilities ramping.

Base call (not logged as a tracked forecast): FY2026 diluted EPS ≈ $12.0–12.5, p≈0.6.

Lens 12 · Bull vs Bear

Bull case. Nucor is the highest-quality, lowest-cost, best-capitalized way to own a structurally re-rated US steel market. Section 232 at 50% with no exemptions + 142 AD/CVD orders have built a durable domestic price floor (US HRC ~2x the SE Asia benchmark); import share has already fallen 22%→15%. On top of that cyclical/policy tailwind sits a company-specific growth engine — ~$9.7B of recent investment (the 3M-ton WV sheet mill, Brandenburg plate, micro-mills, and the higher-margin doors/panels/racking/towers "Expand Beyond" platform aimed straight at data-center and infrastructure demand) that converts from start-up cost to earnings in 2026–28, structurally lifting normalized EPS and dampening cyclicality. Capital allocation is best-in-class (50+ year dividend grower, counter-cyclical $4B buyback, A- balance sheet). The earnings surprise potential is to the upside if the new price floor holds while growth volume lands.

Bear case (permanent-impairment risks). (1) It's a commodity cyclical, and the cycle is already turning up in the price — +118% trailing, all-time high, ~21x trailing earnings; you are buying after the re-rate, and the muted +4% on a 14.5% Q1 beat says recovery is consensus. (2) The moat's most potent layer is policy, not structure — a Section 232 rollback, dilution, or a successful WTO/trade challenge would deflate the US price premium fast; this is exogenous and bimodal. (3) China's structural overcapacity (OECD est. ~704M tons of global excess, ~8x US output; China exported a record 131M tons in 2025) keeps a permanent lid on global pricing and finds its way in via circumvention. (4) Capex-cycle timing risk — new-mill volume could land into a softer price, prolonging start-up drag and pressuring returns on the $9.7B.

Pre-mortem (it's late 2027 and the thesis broke): Section 232 was watered down (legal challenge or a trade deal); China re-routed exports through SE Asia and Mexico; US HRC fell back to the high-$700s; the WV sheet mill ramped into that softer market, so the incremental 3M tons depressed price instead of adding margin; nonresidential construction rolled over as rates stayed high; steel-products margins never recovered. EPS reverted toward $8 and the ~13x forward multiple compressed on a "back-to-trough" narrative — a 30–40% drawdown.

Are multiples too high? Trailing ~21x is rich; forward ~13–14x on $12 consensus is reasonable-to-cheap if you believe the normalized floor has structurally stepped up. The whole debate is the durability of that floor.

Contrarian view (what the market may be refusing to see): The market is still pricing Nucor as a pure cyclical mean-reverting to a low-single-digit-billions trough. If Section 232 + AD/CVD prove durable and the value-added/growth mix genuinely lowers earnings volatility, Nucor's trough earnings have permanently re-based higher — which would justify a higher through-cycle multiple than the steel group has historically earned. Conversely, the bears are right that none of that is guaranteed and the policy leg is one election/court ruling from cracking.

Lens 13 · Devil's Advocate (short-seller)

Dismantling the bull case.

• What structurally breaks the model: Steel is a commodity; Nucor's selling price is set by HRC and scrap spreads it doesn't control. Strip away the tariff wall and US prices converge toward the ~$571/mt global benchmark — a >40% gap. The entire bull thesis leans on a government policy that "may be enacted, enforced, extended, modified or terminated in the future" (Nucor's own 10-K language).
• Revenue concentration / what shifts: Not customer concentration (largest ~5%) but end-market concentration in nonresidential construction — the single largest end-use, and the most rate-sensitive. If high rates finally bite commercial construction, the products segment (already margin-squeezed) gets worse and mills volume softens.
• Why the moat is weaker than bulls think: Steel Dynamics matches Nucor's EAF cost curve and execution and trades roughly in line — so the "quality premium" is shared, not unique. The branded/value-added products are still a minority of mix; most of Nucor is price-taker commodity.
• Most dangerous competitor bulls underestimate: Steel Dynamics (same model, arguably as well-run, also adding sheet capacity) competing for the same tariff-protected domestic tons — plus the wave of new domestic EAF capacity (including SDI's and others') that the tariff umbrella is incentivizing, which could oversupply the protected market and compress the very premium that justifies the stocks.
• Worst capital-allocation / accounting concerns: Few — but the ~$7.2B goodwill+intangibles from the doors/panels/racking M&A is a future impairment risk if the downstream cycle stays soft, and the related-party family ties + insider-heavy bench are governance-optics nits.
• Assumptions that must hold for today's price: (1) Section 232/AD-CVD stay at full strength; (2) US HRC holds ~$950–1,100/st; (3) the $9.7B growth capex earns its return at high utilization; (4) products margin recovers. Break any one and the forward multiple is too high.
• Valuation if growth disappoints 20–30%: Knock 25% off the ~$12 base → ~$9 EPS; pair that with a "back-to-cyclical" 11–12x and you get ~$100–110 — a ~55–60% downside from ~$259. That asymmetry after a +118% run is the short's whole pitch.
• Single scenario that permanently impairs the business: A durable Section 232 repeal/dilution coincident with a fresh wave of domestic EAF oversupply — a structurally lower US price with more domestic tons chasing it. Plausibility: low-to-moderate near-term (no rollback signs in 2026 ), but it is the live tail and it is bimodal.

Lens 14 · Management Questions (ordered by information value)

1. What is your base-case assumption for the durability of Section 232 at 50%, and how would your capital-allocation and capacity plans change under a rollback or a successful trade/legal challenge?
2. With the WV sheet mill (~3M tons) and other domestic EAF capacity all coming online under the tariff umbrella, how do you avoid the protected US market becoming oversupplied and compressing the price premium?
3. What is the expected normalized through-cycle EBITDA/EPS floor now vs the last cycle, and how much of any step-up is policy vs structural (mix/cost)?
4. Walk us through the path of the ~$9.7B recent investment from start-up cost to run-rate earnings — what incremental EBITDA at what utilization, and by when?
5. How far can "Expand Beyond" (doors, panels, racking, towers) realistically take the value-added share of mix, and what does that do to mid-cycle margin volatility?
6. Steel Dynamics matches your cost curve and trades in line — what specifically is Nucor's durable edge over the other quality EAF operator?
7. Scrap economics: as global EAF share rises and prime scrap tightens, what is the multi-year plan (DRI expansion? more captive supply?) to protect metal margin?
8. Data-center demand is now a headline driver — quantify it: what % of steel-products revenue today, and what's the realistic ceiling?
9. With the new $4.0B buyback and capex stepping down to ~$2.5B, what's the priority order for incremental FCF over the next 24 months — buyback, M&A, or debt?
10. On the CFO transition and Laxton's elevation to President/COO — what is the succession plan for the CEO seat, and how is continuity of the culture safeguarded?
11. The ~$7.2B goodwill+intangibles from recent M&A — under what scenario would any of it be impaired, and how confident are you in the returns on C.H.I./Rytec specifically?
12. How exposed is the nonresidential-construction end market to sustained high rates, and what's the leading-indicator dashboard you watch?
13. What is the status and worst-case cost of the Louisiana DRI Clean Air Act settlement with DOJ/EPA/LA DEQ?
14. After the May 2025 cyber incident, what changed in operational-technology security, and what's the residual risk to mill uptime?
15. Where are you most likely to be wrong on the 2026–27 outlook — what's the internal bear case?

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