Is Nucor a Buy After Its Blockbuster Earnings Report?

Key Points

Nucor stock is up more than 37% so far this year.

It's trading at about 29 times earnings.

Tariffs on foreign steel have helped the company compete.

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Nucor (NYSE: NUE) produces nearly a quarter of all the raw steel in the U.S. The company announced first-quarter earnings on April 27, beating analysts' expectations.

The company reported revenue of $9.5 billion, up 21.3% year over year, and earnings per share (EPS) of $3.23, up 382% year over year. Analysts had predicted revenue of $8.86 billion and EPS of $2.82. The company's stock is up almost 5% since its earnings announcement and more than 38% so far this year.

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There are three more reasons why the steelmaker's stock might still be a good buy, even trading at 29 times earnings.

1. Steel prices may be high for a while

Thanks to tariffs and fewer imports, steel rebar was trading at $459 per metric ton on Tuesday, more than 9% higher than this time last year.

The reasons for the price increase include infrastructure projects in the major developing nations and the current conflict in the Middle East, which has made it more expensive for China and other major steel exporters to produce steel.

Spring and summer are also high-demand seasons for construction, so builders are buying more steel and stocking up. The World Steel Association predicts that the world's appetite for steel will grow slightly this year and then jump as much as 4% in 2027, excluding demand in China.

Nucor is a primary beneficiary of the ongoing Infrastructure Investment and Jobs Act (IIJA) funding, which requires U.S. entities that use it to use U.S.-made steel and other manufactured products. The act is expected to drive high demand for U.S. structural steel and rebar through 2026. On top of that, U.S. tariffs are helping prop up the company's margins by making foreign steel imports more expensive.

2. Nucor has a green steel advantage

Nucor uses electric arc furnaces (EAF), which melt recycled scrap metal rather than traditional coal-fired blast furnaces. The EAFs are powered by electricity and can be turned on or off as needed, reaching steel-melting temperatures quickly, improving maintenance efficiency, and enabling scalable production.

The company's production process with scrap metal produces roughly 60% to 70% lower carbon emissions than competitors' traditional methods. Tech giants and automotive companies that face pressure to decarbonize their supply chains are often willing to pay a premium for Nucor's low-carbon steel.

3. Its focus on specialized steel could pay off

Nucor has moved beyond basic commodity steel into high-value, specialized products. Its mill in West Virginia, expected to start production in 2027, is designed specifically for automotive and appliance sheet steel customers. The price of steel is highly cyclical, but Nucor's EAF mills are easier and less expensive to ramp up for production when needed.

Some of Nucor's specialized products include the wind turbines used in wind towers, specialized steel supports, and cooling enclosures used by data centers.

Some other factors to consider

Before going all-in on Nucor stock, realize that if the U.S. rolls back or exempts specific countries from the steel tariffs, that would likely mean more competition from cheaper foreign steel. Other concerns are that an increase in the cost of raw materials that Nucor uses, including pig iron, iron ore, and scrap steel, would also cut into its margins.

Despite those concerns, there are strong long-term reasons to buy and hold Nucor stock. The company has raised its dividend for 53 consecutive years, including a 2% increase in 2025. That makes it a Dividend King, one of only a handful of stocks that have raised their dividend for 50 or more consecutive years. Its yield at its current price is around 1%.

The company continues to see strong demand. Despite selling a record 7.4 million tons in the first quarter, it still had a backlog of 4.7 million tons at the end of the quarter, up 20% year over year, including record backlogs for rebar and structural steel.

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James Halley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.