Nucor Stock Experiences Decline Amid Q3 Guidance, Berkshire Hathaway Investment Offers Long-Term Perspective

Market Reaction to Nucor's Q3 Guidance and Berkshire Hathaway Investment

Nucor Corporation (NUE) experienced a notable decline in its stock price on September 18, 2025, falling 6.09%, or $8.70, to close at $134.10. This market movement followed the steelmaker's announcement of third-quarter earnings guidance that fell below analyst expectations. The downturn occurred amidst the backdrop of a significant, albeit previously disclosed, investment by Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B), which had recently increased its stake in the company.

Earnings Guidance and Market Response

Nucor anticipates third-quarter earnings per diluted share to be between $2.05 and $2.15, a figure substantially lower than the consensus analyst estimate of $2.63. This projected decline follows a second quarter where the company reported a profit of $2.60 per share. The company attributed the expected earnings decrease across all three of its operating segments: the steel mills segment faces lower volumes and margin compression, the steel products segment anticipates higher average costs per ton, and the raw materials segment expects reduced profitability in scrap processing operations. This guidance fueled immediate market anxiety regarding Nucor's near-term profitability outlook and broader industry headwinds.

Simultaneously, the market continued to process Berkshire Hathaway's strategic acquisition of approximately 6.6 million shares of NUE, valued at around $856.8 million, as detailed in its Q2 2025 13F filing. While this investment constitutes only 0.3% of Berkshire's vast portfolio, it represents a significant vote of confidence from a renowned value investor in a sector often characterized by volatility.

Broader Context and Strategic Positioning

Nucor stands as North America's largest and most diversified steel company, primarily leveraging flexible electric arc mini-mills for steel recycling. This operational model contributes to its position as one of the lowest-cost producers in the industry. The company is recognized as a "Dividend King," having consistently increased its dividends for over five decades, a testament to its financial resilience and disciplined capital allocation even through cyclical downturns in the steel industry. As of Q3, Nucor repurchased approximately 0.7 million shares at an average price of $140.46, contributing to $985 million returned to shareholders year-to-date through buybacks and dividends.

Despite the recent share price drop, the underlying rationale for Buffett's investment appears rooted in Nucor's long-term strategic advantages. The company has a substantial $3 billion capital investment plan for 2025, part of a larger $6.5 billion capex plan through 2027, aimed at expanding into high-margin segments. These investments target growing demand from sectors such as electric vehicles (EVs) and data centers, where steel underpins critical infrastructure. Furthermore, Nucor's vertical integration and innovative EAF technology are seen as buffers against raw material volatility, while initiatives like Econiq™ align with decarbonization trends.

Market observers note that while NUE stock had surged 22% year-to-date prior to the Q3 guidance, Buffett's Q2 purchases largely occurred when the stock was trading lower. This suggests a "buying the dip" strategy, capitalizing on an undervalued asset rather than chasing momentum. Analysts point to Nucor's valuation, which trades at less than 1x forward sales (projected at $34 billion for 2026), significantly below its 10-year average of 1.2x, despite a current Price-to-Earnings (P/E) ratio of 26.2x that exceeds the steel sector average of 4.5x. This premium valuation reflects investor confidence in Nucor's structural advantages and ability to outperform peers, bolstered by a 50% tariff on imported steel that shields domestic players.

Looking Ahead

The immediate focus for investors will be Nucor's official third-quarter earnings release, scheduled for October 27, 2025. This report will provide further clarity on the magnitude of the challenges faced across its operating segments and the impact on profitability. Longer-term, the market will monitor the progress of Nucor's significant capital expenditure projects and their ability to generate returns as demand from infrastructure, clean energy, and data center construction continues to evolve. The strategic implications of Berkshire Hathaway's sustained confidence in Nucor reinforce the narrative that the steelmaker, despite cyclical pressures, possesses fundamental strengths that may appeal to patient, value-oriented investors over an extended horizon.