Nucor (NUE): Berkshire’s $857M Stake, Q2 Results and Capital-Allocation Stress Test

Berkshire Hathaway’s new stake and a mixed-quarter moment for [NUE]#

Berkshire Hathaway disclosed a new position in Nucor valued at roughly $857 million, a headline-grabbing development that landed just as Nucor reported a quarter that combined an earnings beat with cautionary guidance. The timing amplified attention: a marquee long-term investor signaling confidence while management simultaneously warned of near-term margin pressure. That contrast—sentiment support on one hand, operational caution on the other—frames the most important near-term story for investors in Nucor.

The Q2/Q3 interplay matters because Nucor’s recent operating performance shows a company still generating scale but confronting cyclical headwinds. In FY 2024 Nucor reported $30.73B in revenue and $2.03B in net income, down from $34.71B and $4.52B in FY 2023 respectively, reflecting a -11.46% change in revenue and a -55.20% swing in net income year-over-year. Those moves expose how quickly steel margins and cash generation can re-price a business that is otherwise operationally differentiated.

Sentiment and fundamentals are both relevant, but they answer different questions. Berkshire’s purchase is a durable-confidence signal about the company’s long-term positioning and management, while Nucor’s results and guidance speak to the nearer-term economics of mills, scrap spreads and trade flows. For active investors that distinction is critical: one is flow-driven and attention-generating, the other drives cash generation, leverage and the company’s ability to keep buying back stock and investing in capacity.

Earnings and cash-flow read: beats, misses and material swings#

Nucor’s Q2 2025 reporting cycle offered a classic mixed signal: management beat on consensus EPS in recent quarters but guided conservatively for Q3, and FY 2024 showed a material deterioration in cash generation versus 2023. The company’s FY 2024 income statement shows gross profit of $4.10B and operating income of $2.98B, yielding a gross margin of 13.35% and an operating margin of 9.69%—both down sharply from 2023 levels (gross margin 22.54%, operating margin 17.95%) (see company filings and financials). According to Nucor’s Q2 release and company financials, the quarter included an EPS beat in isolation, but several moving parts weaken the signal when viewed across the full year.Nucor Q2 2025 results and release

Free cash flow and balance-sheet dynamics are the clearest discipline metrics here. Nucor’s free cash flow fell to $806M in FY 2024 from $4.90B in FY 2023—a decline of -83.54%—driven by a combination of higher capex ($3.17B in 2024 versus $2.21B in 2023), increased acquisitions activity ($758M of acquisitions in 2024 vs $106M in 2023) and aggressive share repurchases ($2.22B repurchased in 2024). Those decisions pushed net debt from $459MM at year-end 2023 to $3.39B at year-end 2024—an increase of +$2.93B (++638.66%). The outcome: a business with diminished cash cushion despite continuing large-scale buybacks and elevated capex.[Financial statements and cash-flow tables]

There is a subtle data inconsistency to note: the FY 2024 income statement lists net income of $2.03B, while the cash-flow dataset shows net income of $2.32B for the same period. When data series conflict, the income statement is generally the primary source for reported net income because it reflects consolidated GAAP results; differences in datasets can reflect timing, classification of minority interests, or post-close adjustments. We flag the divergence as material to reconciling margins and payout metrics and prioritize the income-statement figure while noting the cash-flow package (operating cash flow $3.98B) as the operational reality for liquidity.[Company filings and consolidated statements]

Income, margins and year-over-year trend table#

Below is a condensed, independently verified view of Nucor’s income-statement trend for FY 2021–FY 2024. All margins are calculated from the reported line items.

(Values sourced from company financials and filings; margins calculated by author.)

Balance-sheet shape, capital allocation and the buyback paradox#

Nucor entered the latest reporting period with a strong equity base—total stockholders’ equity of $20.29B at year-end 2024—and an asset footprint of $33.94B. That equity cushion gives management flexibility, yet the company’s recent capital allocation choices materially tightened liquidity. Cash on the balance sheet fell from $6.38B at the end of 2023 to $3.56B at the end of 2024, a decline of -44.17%, driven by heavy capex and buybacks. The balance-sheet trade-off is explicit: management is investing to expand and modernize capacity while simultaneously returning capital to shareholders.

Net-debt dynamics crystallize the risk trade-off. Net debt rose to $3.39B in 2024 from $459MM in 2023 after $2.22B of share repurchases and $758M of acquisitions, alongside $3.17B of capex. The company’s reported debt metrics remain moderate—total debt $6.95B vs equity $20.29B, yielding debt-to-equity roughly 0.34x—but the pace of cash deployment leaves less margin for error should cyclicality deepen. In other words, solvency is intact today, but flexibility to respond to a deeper downturn has been reduced compared with the prior year.[Balance-sheet and cash-flow statements]

Nucor’s historical capital allocation pattern favors buybacks when cash generation is robust, and the board has continued repurchases even amid falling FCF. That pattern preserved shareholder returns but materially increased leverage and reduced the cash buffer in a weakening pricing environment, which is exactly when a conservative balance sheet typically adds value. The company’s forward free-cash projections and management guidance will determine whether this mix is sustainable through the trough of the cycle.

Balance-sheet and cash-flow highlights table (selected items)#

(Sourced from company filings; numbers rounded; author-calculated net-debt and percent changes.)

Margin story: where the squeeze happened and why#

Nucor’s margins compressed materially between 2022/2023 and 2024. The company’s gross margin contracted from over 30% in 2021–2022 to 13.35% in 2024, and operating margin followed the same path. The proximate drivers are textbook for an EAF-based steelmaker facing a softer cycle: weaker spreads between finished-steel selling prices and raw-material inputs (notably scrap and alloy costs), and fading policy-related pricing cushions such as tariffs. Management explicitly called out mill-margin pressure in guidance as a near-term headwind.Nucor Q2 2025 results and release

Decomposing margin compression shows a mix story as well. Nucor’s product mix, exposure to commodity-grade steels and the timing of scrap procurement create volatility: when scrap costs spike relative to realized finished prices, margins move quickly. The company’s investment in automation and logistic advantages (scrap sourcing and recycling) improves structural cost position over time, but these advantages are insufficient to fully offset broad market price declines in the short run. In other words, the moat is real but it is not immune to the steel cycle.

Compared with integrated peers, Nucor’s cost structure is less capital intensive and more flexible because of its EAF footprint; that helps protect returns on the rebound. Yet the magnitude of margin decay in 2024 demonstrates that even lower-capex EAF players are exposed to the combination of weaker finished-product pricing and sustained input-cost pressure—an industry dynamic likely to repeat until demand or trade policy shifts materially.

Competitive positioning and strategic execution#

Nucor’s structural advantages remain intact. The company operates a predominantly EAF-based network, has deep scrap-recycling capability and continues to invest in automation and capacity upgrades. Those attributes underpin management’s long-term case and align with why a large institution like Berkshire would add a position: predictable manufacturing economics, domestic footprint and a capital-allocation DNA that historically favored shareholder returns when cash generation permitted. The Berkshire disclosure is therefore best read as confirmation that Nucor’s strategic positioning is respected by long-term allocators (sources reporting the stake include industry press and institutional filings).

But strategic strength does not neutralize cyclical exposure. The steel sector’s demand drivers—reshoring, infrastructure spending and auto/construction consumption—remain multi-year supportive themes, yet they are uneven quarter to quarter. As tariffs and policy supports fade as a margin bolster, the company must rely primarily on operational execution and timing of raw-material purchases to manage profitability. That leaves short-term results vulnerable to import flows and global pricing volatility even as the long-term franchise remains attractive in structural terms.[AInvest Berkshire coverage and market transcripts]

Management credibility is an asset. Nucor’s track record of disciplined capital allocation—historically leaning toward buybacks during periods of abundant cash—has delivered shareholder value in prior cycles. The present cycle tests that discipline because large buybacks combined with heavy capex and acquisitive moves tightened cash. The critical execution question is whether management can preserve the franchise’s long-term returns while moderating buybacks and cymbalizing investments during weaker cash cycles.

Valuation signals and forward expectations#

Market multiples already reflect a mixed view. At the time of the latest quotes, Nucor traded around $145.52 per share with a market capitalization near $33.58B, implying a TTM P/E around 25.89x and an EV/EBITDA TTM of 10.72x. Forward consensus embedded in the dataset shows a projected P/E compression over coming years (forward P/E 2025: 17.54x, 2026: 13.09x) as earnings are expected to recover from the 2024 trough. Forward EV/EBITDA estimates fall materially as well (2025 forward EV/EBITDA 5.55x), reflecting analyst assumptions of margin normalization and improved cash generation over the medium term.[Fundamentals and forward estimates]

Those market-implied trajectories—lower forward multiples and a forecasted return of earnings power—are sensible only if two conditions hold: steel spreads and volumes stabilize, and management tempers discretionary cash outflows while capital investments begin to convert into higher throughput and margins. If either condition fails (persistent margin weakness or continued aggressive buybacks against a low FCF backdrop), multiples will re-rate to reflect higher risk. Conversely, if scrap spreads normalize and capex lifts efficiencies as planned, forward earnings could validate the expectations embedded in the forward multiples.

What this means for investors#

Nucor’s situation is a study in the interaction between sentiment and fundamentals. Berkshire Hathaway’s $857M stake increases the stock’s visibility and likely improves liquidity, but it does not alter fundamental drivers: mill spreads, scrap markets, import flows and cyclical demand. Investors should therefore separate three different lenses when considering Nucor: sentiment (the Berkshire effect), operational execution (margins, capex returns, scrap sourcing) and balance-sheet flexibility (net debt and free-cash-flow trajectory).[AInvest coverage and company filings]

From a capital-allocation lens, the near-term priority is reconciling buybacks and acquisitions with a shrunken free-cash-flow runway. Nucor spent $2.22B on repurchases in 2024 while free cash flow plunged to $806M. That disconnect—large returns when FCF is weak—raises the risk that the company may need to moderate repurchases if the downcycle persists. That adjustment is not an indictment of management’s long-term strategy; it is a reminder that timing matters for shareholder distributions in cyclical industries.

Operationally, the story to watch is margin stabilization. If scrap spreads and finished-steel pricing stabilize and Nucor’s investments in capacity and automation begin delivering unit-cost improvements, the company can recover operating leverage quickly because of its scale and lower structural capital intensity versus integrated competitors. If not, the company will face a longer recovery and the balance sheet will be the principal constraint on optionality.

Key takeaways and final synthesis#

Nucor’s strategic positioning is the core reason the stock commands institutional interest: an EAF-heavy footprint, strong scrap-recycling capability and a history of shareholder returns. Berkshire Hathaway’s roughly $857M position is an important sentiment signal that underscores those structural strengths. Yet the company’s FY 2024 financials and Q2 commentary underline that the steel cycle—raw material spreads, imports and demand mix—continues to dominate near-term outcomes.

The most actionable financial signals are clear: free cash flow collapsed -83.54% year-over-year to $806M, net debt increased by +$2.93B to $3.39B, and margins contracted sharply from 2022 highs. Those facts together create a capital-allocation stress test: can management balance investment in productive capacity and shareholder returns while navigating a trough in margins? The balance sheet is currently adequate, but flexibility is meaningfully reduced versus 2023.

In sum, Berkshire’s stake materially increases attention and provides a confidence vote in Nucor’s strategic positioning, but it does not insulate the company from cyclical headwinds. The near-term story for Nucor is thus dual: operational execution (margin stabilization and capex returns) and prudent capital allocation (aligning repurchases with sustainable cash generation). Both will determine whether forward estimates embedded in market multiples are realized.