State of Steel: Buyer Breakfast Takeaways

Research evidence excerpt

State of Steel: Buyer Breakfast Takeaways

Industry Update Equity Research

Investment Thesis, Valuation and Risks

Nucor Corporation (NUE)

Investment Thesis

Our Overweight rating reflects upside to steel forecasts for 2026E and expectation of greater shipments as NUE ramps up capacity and

takes share from imports. Capex should ease, and recent yrs of outsized spend should fade into 2027E. As such, FCF should improve in

2026E/2027E, for growth options beyond our forecasts. NUE can also benefit from growing data center and utility-related demand.

Target Price Valuation for NUE

Our $292 price target reflects 9x EV/EBITDA multiple on 2027E EBITDA, above its five-year historical average but in line with its trading

multiple in 2025. We think the higher multiple is justified to reflect growth investments not yet benefiting results and eventual superior

FCF yield than in the past.

Risks to Our Price Target and Rating for NUE

Downside risks include: 1) unexpected operational disruptions; 2) greater competition from other players in the industry; 3) any relief in

import tariffs or other adverse trade policy; 4) weaker-than-expected demand. In particular NUE is ramping up several new operations

concurrently, which could result in risk of delayed startup timing or other disruptions.

Steel Dynamics, Inc. (STLD)

Our Overweight rating reflects expectations for recent outsized investments to boost results and FCF in 2026 beyond peers. Shares could

also benefit more than peers from our near-term constructive sheet price view, and upside from its new aluminum rolling mill.

Target Price Valuation for STLD

Our $293 PT reflects 9x 2027E EV/EBITDA. The higher multiple than its historical 10-year average ~7x reflects considerable growth