United States Steel (NYSE: X) and Nucor (NYSE:NUE) are both mid-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, dividends, risk, institutional ownership and valuation.
Institutional & Insider Ownership
64.2% of United States Steel shares are owned by institutional investors. Comparatively, 74.3% of Nucor shares are owned by institutional investors. 1.0% of United States Steel shares are owned by insiders. Comparatively, 0.7% of Nucor shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
United States Steel has a beta of 3, indicating that its stock price is 200% more volatile than the S&P 500. Comparatively, Nucor has a beta of 1.58, indicating that its stock price is 58% more volatile than the S&P 500.
This is a breakdown of recent recommendations for United States Steel and Nucor, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|United States Steel||2||6||9||0||2.41|
United States Steel presently has a consensus price target of $29.81, indicating a potential downside of 22.54%. Nucor has a consensus price target of $66.90, indicating a potential downside of 1.42%. Given Nucor’s stronger consensus rating and higher probable upside, analysts clearly believe Nucor is more favorable than United States Steel.
United States Steel pays an annual dividend of $0.20 per share and has a dividend yield of 0.5%. Nucor pays an annual dividend of $1.52 per share and has a dividend yield of 2.2%. United States Steel pays out 29.4% of its earnings in the form of a dividend. Nucor pays out 42.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Nucor has raised its dividend for 44 consecutive years. Nucor is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares United States Steel and Nucor’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|United States Steel||1.05%||10.27%||2.67%|
Earnings & Valuation
This table compares United States Steel and Nucor’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|United States Steel||$10.26 billion||0.66||-$440.00 million||$0.68||56.60|
|Nucor||$16.21 billion||1.33||$796.27 million||$3.59||18.90|
Nucor has higher revenue and earnings than United States Steel. Nucor is trading at a lower price-to-earnings ratio than United States Steel, indicating that it is currently the more affordable of the two stocks.
Nucor beats United States Steel on 12 of the 16 factors compared between the two stocks.
About United States Steel
United States Steel Corporation is an integrated steel producer. The Company is engaged in producing flat-rolled and tubular products with production operations in North America and Europe. The Company operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE) and Tubular Products (Tubular). The Flat-Rolled segment includes the operating results of its integrated steel plants and equity investees in the United States involved in the production of slabs, rounds, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States. The USSE segment includes the operating results of U. S. Steel Kosice (USSK) and its integrated steel plant and coke production facilities in Slovakia. The Tubular segment includes the operating results of its tubular production facilities, primarily in the United States and equity investees in the United States and Brazil.
Nucor Corporation (Nucor) manufactures steel and steel products. The Company produces direct reduced iron (DRI) for use in its steel mills. It operates in three segments: steel mills, steel products and raw materials. The steel mills segment produces and distributes sheet steel (hot-rolled, cold-rolled and galvanized), plate steel, structural steel (wide-flange beams, beam blanks, H-piling and sheet piling) and bar steel (blooms, billets, concrete reinforcing bar, merchant bar, wire rod and special bar quality). The steel products segment produces steel joists and joist girders, steel deck, fabricated concrete reinforcing steel and cold finished steel. The raw materials produces DRI; brokers ferrous and nonferrous metals, pig iron, HBI and DRI; supplies ferro-alloys, and processes ferrous and nonferrous scrap metal. It also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron (HBI) and DRI.
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