Nucor Steel Corp. (NUE) proudly traces its roots to Ransom Olds, founder of the Oldsmobile Automobile Company. Olds had the reputation of an innovator, having introduced electric lights, the electric starter and pneumatic tires to the auto industry.
Olds would be proud of his progeny, as Nucor has continued the tradition of innovation.
The United States’ largest producer of the steel joists and steel decks used in the non-housing construction sector has led the nation and the world in the development of technologies and systems for the manufacturing of hot and cold rolled steel.
Operating in ignominious fashion through several losing years in the nuclear instrument and electronics sector during the 1960s, the present day Nucor evolved primarily from the acquisition of a South Carolina company manufacturing steel girders and joists.
When it became clear that the new company, Vulcraft, was the source of the majority of the company’s profits, Nucor divested itself of the majority of its operating entities and focused on the growth of the rolled steel business.
The company as it exists today is the result of several steel manufacturing related acquisitions and the original Nucor organization. Through the acquisition of the David J. Joseph Company Nucor became brokers of ferrous and non-ferrous metals. Nucor is now the nation’s largest metal recycler.
Driven by Innovation
Nucor was the first of the mini-steel companies to recognize the opportunity represented by recycling scrap steel through the use of the electric arc furnace mill. This process allowed the company to manufacture hot and cold rolled steel from smaller mills that are much less expensive to operate.
Nucor was also a pioneer in the development of a thin slab cast mini-mill which many skeptics in the industry, particularly from the mega-producers, said could not be done.
The successful launching of Nucor’s thin slab cast mill in the U.S. demonstrated to the industry that mini-mills could become significant players in the steel business.
A strong management team and a dedicated and loyal workforce are the other keys to Nucor’s organizational strength. The company has one of the leanest management structures among Fortune 500 companies. The workforce is encouraged to experiment and innovate and management has placed employee welfare and development at the top of its priorities.
Steal at These Prices?
The company has a strong balance sheet with a debt to equity ratio under 0.40. Currently trading at a Price/Earnings ratio of under 6 and a forward P/E of 9, the company’s stock is an attractive buy. Although management has not issued guidance for the coming period, it has noted that sales are stronger than expected.
This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight like this, go to: www.InvestorPlace.com. James F. Dlugosch contributed to this article.
