Last update on 2024-06-07

Nucor (NUE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Nucor (NUE) received a Piotroski F-Score of 6/9 in 2023, showcasing its financial strengths and areas for improvement using a reliable financial analysis model.

Short Analysis - Piotroski Score: 6

We're running Nucor (NUE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Nucor (NUE) has been rated using the Piotroski F-Score system to evaluate its financial health based on nine criteria related to profitability, liquidity, and operating efficiency. Here's a brief overview: 1. **Profitability:** - Positive net income ($4.5B): 1 point. - Positive cash flow from operations ($7.1B): 1 point. - Decrease in ROA (0.1334 in 2023 from 0.261 in 2022): 0 points. - Operating cash flow greater than net income: 1 point. 2. **Liquidity:** - Declining leverage (0.1881 in 2023 from 0.2036 in 2022): 1 point. - Increasing current ratio (3.5664 in 2023 from 3.3932 in 2022): 1 point. - Reduction in outstanding shares (249.8M in 2023 from 262.3M in 2022): 1 point. 3. **Operating Efficiency:** - Decrease in gross margin (0.2251 in 2023 from 0.3012 in 2022): 0 points. - Decrease in asset turnover ratio (1.0237 in 2023 from 1.424 in 2022): 0 points. Overall, Nucor scores 6 out of 9 on the Piotroski F-Score, implying it's a moderately strong stock financially.

Insights for Value Investors Seeking Stable Income

Given Nucor’s Piotroski F-Score of 6, the stock shows a decent financial position. Positive indicators include strong profitability, improving liquidity, and efficient cash management. However, there are concerns about declining ROA, gross margin, and asset turnover. If you're an investor looking for stable companies in the steel industry, Nucor could be worth considering, yet be cautious and investigate the areas showing decline further to make a well-rounded investment decision.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Nucor (NUE)

Company has a positive net income?

The criterion examines whether Nucor's net income is positive, signaling profitability. Positive net income is crucial as it indicates the company's ability to generate profits from its operations, strengthening investor confidence.

For the year 2023, Nucor's net income stands at $4,524,801,000, which is comfortably in the positive territory. Over the last 20 years, it's noteworthy that Nucor has had only one year (2009) with negative net income, marking a resilient profit generation track record. Given this, Nucor earns a point under the net income criterion. This upward trend and consistent historical performance underline Nucor's solid operational efficacy, particularly impressive considering the volatility in the steel industry.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) measures the amount of cash generated by a firm's regular business operations. It is a crucial indicator of financial health.

For Nucor (NUE), the CFO in 2023 is $7,111,931,000, which is a positive value. This is highly favorable as it indicates the company generated significant cash from its core operating activities. Over the last 20 years, NUE's CFO has generally trended upwards, with certain fluctuations according to market conditions. In the context of the Piotroski Analysis, a positive CFO gets a full point, suggesting robust operational efficiency for 2023.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures a company's effectiveness in using its assets to generate earnings year over year.

For Nucor (NUE), ROA decreased from 0.261 in 2022 to 0.1334 in 2023. This represents a significant decline. Given that for Piotroski analysis, a decrease in ROA triggers 0 points, this trend is not favorable. Historically, the company's ROA exhibited fluctuations, with tremendous peaks and valleys over the past 20 years, but the recent drop below the Industry Median of 0.1995 indicates a potentially worrying scenario.

Operating Cashflow are higher than Netincome?

This criterion measures whether a company's operating cash flow exceeds its net income. It signifies efficient cash management.

For 2023, Nucor generated an operating cash flow of $7,111.93 million against a net income of $4,524.80 million. As operating cash flow surpasses net income, Nucor earns 1 point for this criterion. Over the past 20 years, cash flow from operations has sometimes lagged behind net income, but 2023 represents a positive trend. This indicates strong operational efficiency and ability to convert sales into cash.

Liquidity of Nucor (NUE)

Leverage is declining?

Change in Leverage relates to how the company's capital structure shifts towards debt or equity year over year.

The leverage for Nucor (NUE) has decreased from 0.2036 in 2022 to 0.1881 in 2023. This indicates a reduction in the company's reliance on debt financing. Analysis of the past 20 years shows that leverage peaked in 2012 at 0.2879 but has generally trended downward since then. The current level (0.1881) represents one of the lowest points in this timeframe, which is favorable as it suggests improved financial stability and reduced financial risk. Hence, Nucor earns 1 point for this criterion based on the Piotroski score.

Current Ratio is growing?

Change in Current Ratio measures how well a company can meet its short-term liabilities, an essential measure of liquidity and operational efficiency.

The Current Ratio for Nucor (NUE) increased from 3.3932 in 2022 to 3.5664 in 2023, indicating improved liquidity. Specifically, the ratio is well above the industry median, which was 2.6748 in 2023. Over the last 20 years, Nucor's Current Ratio has fluctuated but has remained generally higher than the industry median, reinforcing its strong liquidity position. Thus, we can add 1 point based on the increase in 2023, reflecting a positive trend.

Number of shares not diluted?

The criterion evaluates the change in shares outstanding, indicating whether the company has engaged in share repurchase programs or issued more shares.

In 2023, Nucor's outstanding shares stand at 249,773,000, down from 262,348,000 in 2022. This reduction in outstanding shares reflects a positive trend, adding 1 point to the Piotroski score. Nucor has been buying back shares, reducing dilution and potentially enhancing shareholder value. Historical data shows fluctuations, but the general trend since 2014 reveals a reduction, signifying consistent efforts in share repurchase programs.

Operating of Nucor (NUE)

Cross Margin is growing?

Change in Gross Margin assesses the profitability performance of a company. A higher gross margin indicates better efficiency in managing production costs relative to net sales.

Comparing the Gross Margin of 0.2251 in 2023 with 0.3012 in 2022, Nucor's Gross Margin unfortunately decreased. This represents a notable decline from an already impressive margin and can thus be assigned a score of 0 according to Piotroski's criteria. Historically, examining the 20-year dataset, Nucor has fluctuated significantly with Gross Margins increasing from lows in the 2008 financial crisis (0.0138 in 2009) to a notable peak of 0.3022 in 2021. The 2023 margin of 0.2251, although lower than 2022, remains appreciable compared to the industry's median of 0.1995. This indicates that while Nucor operates efficiently relative to its peers in the broader industry, its recent performance showcases an area that may need strategic attention to regain and surpass past profitability benchmarks. Thus, the Gross Margin trend for 2023 as compared to 2022 is not favorable.

Asset Turnover Ratio is growing?

The Asset Turnover criterion assesses how efficiently a company uses its assets to generate revenue. It's important because a higher asset turnover indicates more efficient use of assets.

The Asset Turnover for Nucor (NUE) in 2023 was 1.0237, compared to 1.424 in 2022. This represents a decrease in Asset Turnover. Therefore, we assign a score of 0 for this criterion. Reviewing historical data, the Asset Turnover ratio hit its peak in 2004 at 2.1414 and has experienced fluctuations but generally has shown a declining trend in recent years. Such a decline in asset turnover could signify inefficiencies in using the company's assets to generate revenue, which might be a red flag for investors.