Nucor BYU Student Summary 2011-10-13

Nucor BYU Student Summary 2011-10-13 - Nucor Corporation...

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Nucor Corporation 10/09/2011 Analyst Opinion: Hold Outlook: Positive Analyst: Nguyen Bui 5% of 6/1/2013 5.85% of 6/1/2018 CUSIP: 670346AJ4 670346AK1 BFG Purchase Date: 11/18/2008 4/23/2009 Original Par: 6000000 3000000 Current BFG Book Value: 5916699.3 3102740.64 BFG Book Price: 98.612 103.425 BFG Impairment 0 0 Coupon: 5 5.85 Maturity: 6/1/2013 6/1/2018 Market Price: 107.336 116.528 52-Week Range: 106.818-107.955 108.627-112.015 Equity Price: 31.64 (09/30/2011) 52-Week Range: 30.72-49.24 Symbol/Ticker: NUE Ratings: CDS Value: 147.13 CDS Implied Default Probability: 12.16% Moody’s Default Probability: .114% Recovery Rating: 40% Headquarters: Charlotte, NC Recommendation: Nucor Corporation is a holds with a positive, outlook. Heightened Awareness Watch List: No Impairment: No Impairment Taken to Date: 10/1/2011 Recommended Impairment: Page 1
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Nucor Corporation 10/09/2011 Nucor is the largest minimill s steel producer in the United States. In 2010, steel production was 18.3 million tons, and outside steel shipments were 15.8 million tons. Nucor’s goal is to “take care of our customer” by being the safest, highest quality, lowest cost, most productive and most profitable steel and steel products company in the world. It invested a lot into research and development, and has a lean management structure, which gives them more efficiency over its competitors. Government plays an important role in steel industry in several ways. It provides tax breaks to support industry growth and enforce international and local environment laws to reduce pollution and protect the environment. Mergers and acquisition have been taking place over the last years as a new strategy as well as to capitalize the economy of scale. Nucor’s net income was positive for the last ten years , with the exception of 2009, wherein ; it reported negative net income in 2009 due to the decrease in net because of a decline in sales . The bonds ratings have remained unchanged since they were issued. With nonresidential construction stabilized, competition becomes Nucor’s largest challenge. Nucor has a low total debt to assets ratio and generates substantial free cash flow. Nucor’s EBITDA/Interest expense ratio of 6.8 shows it can service its debt. With the global steel industry consolidating via mergers and acquisitions, the increased concentration of production among fewer companies should result in pricing discipl in e. Therefore, Nucor will have the opportunity to continue generating strong free cash flow for the next several years. Nucor reported strong earnings for the second quarter, with net income at $299.9 million more than tripling what the company earned a year earlier. However, Nucor is expected not to have that same strong net income in the third quarter due to company’s prediction in low demand for steel. Highlights:
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This note was uploaded on 11/22/2011 for the course FINANCE BUS M 497R taught by Professor Kimsmith during the Fall '11 term at BYU.

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Nucor BYU Student Summary 2011-10-13 - Nucor Corporation...

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