Nucor Corporation (NUE) vs. POSCO (PKX) Critical Survey

Nucor Corporation (NYSE: NUE) and POSCO (NYSE:PKX) are both large-cap basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.

Valuation & Earnings

This table compares Nucor Corporation and POSCO’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Nucor Corporation $16.21 billion 1.09 $796.27 million $3.44 16.19
POSCO $45.65 billion 0.50 $1.22 billion $5.71 12.49

POSCO has higher revenue and earnings than Nucor Corporation. POSCO is trading at a lower price-to-earnings ratio than Nucor Corporation, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Nucor Corporation has a beta of 1.59, meaning that its stock price is 59% more volatile than the S&P 500. Comparatively, POSCO has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Nucor Corporation and POSCO, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nucor Corporation 0 6 9 0 2.60
POSCO 0 2 2 0 2.50

Nucor Corporation presently has a consensus target price of $67.44, indicating a potential upside of 21.07%. Given Nucor Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Nucor Corporation is more favorable than POSCO.

Institutional & Insider Ownership

74.6% of Nucor Corporation shares are held by institutional investors. Comparatively, 5.2% of POSCO shares are held by institutional investors. 0.7% of Nucor Corporation shares are held by insiders. Comparatively, 0.0% of POSCO shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Nucor Corporation and POSCO’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nucor Corporation 5.80% 12.78% 6.87%
POSCO 3.60% 4.41% 2.78%

Dividends

Nucor Corporation pays an annual dividend of $1.51 per share and has a dividend yield of 2.7%. POSCO pays an annual dividend of $0.55 per share and has a dividend yield of 0.8%. Nucor Corporation pays out 43.9% of its earnings in the form of a dividend. POSCO pays out 9.6% 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 Corporation has increased its dividend for 43 consecutive years. Nucor Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Nucor Corporation beats POSCO on 13 of the 17 factors compared between the two stocks.

Nucor Corporation Company Profile

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.

POSCO Company Profile

POSCO is a Korea-based company principally engaged in the manufacture and distribution of steel products. The Company operates in four segments: steel, trading, construction, and others. The steel segment includes production of steel products and sale of such products. The trading segment consists of global trading activities of POSCO Daewoo Corporation, exporting and importing a range of steel products that are both obtained from and supplied to it, as well as between other suppliers and purchasers in Korea and overseas. The construction segment includes planning, designing and construction of industrial plants, civil engineering projects, and commercial and residential buildings, both in Korea and overseas. The others segment includes power generation, liquefied natural gas (LNG) logistics, and network and system integration.

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