The share price of industrial stalwart Nucor (NUE +0.26%) has soared 10.6% over the last month, easily outperforming the market's 2% gain. That doesn't include an additional 11.3% share price surge from late October, after the steelmaker reported strong Q3 results.
But is that recent outperformance part of a long-term trend or just a short-term anomaly? Here's how Nucor shares have performed for longtime investors.
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One-year returns
Nucor's stock has risen by 11.9% over the past year, which is 0.7 percentage points behind the S&P 500's one-year return of 12.6%:
NYSE: NUE
Key Data Points
As you can see from the chart above, Nucor's stock was severely lagging the market for most of the year after a steep share price drop last December, and even its recent share price gains haven't brought it up to the S&P 500's level.
However, there's another factor to consider: dividends. Nucor's stock pays a dividend that's currently yielding 1.4%, and when we factor in reinvestment of those dividends, Nucor's one-year performance improves slightly to a total one-year return of 13.8%. But that's still lagging the 14.3% total one-year return of the S&P 500.
So, is this one-year underperformance a blip? Has Nucor outperformed the market over the medium term?
Three-year returns: Steel yourself...
Investors who bought shares of Nucor three years ago, on Dec. 8, 2022, weren't doing so badly for the first year. Their shares' performance roughly tracked the performance of the broader market. All that changed in April 2024 after Nucor delivered weak guidance in its Q1 2024 earnings release. Nucor's share price declined for the rest of 2024 even as the broader market rose throughout the year.
At least Nucor investors aren't underwater: Their three-year returns are 6.5%, or 11.2% on a total return basis. But the opportunity cost has been tremendous: the S&P 500 has returned 74.4% on an absolute basis and 82.4% on a total return basis during the same time period, meaning Nucor investors' three-year returns are lagging the market by almost 70 percentage points either way.
Well, if the one- and three-year returns are this bad, the five-year returns must be abysmal, right? Wrong.
Five-year returns: Soaring like a man of steel
Nucor's one-year returns were slightly behind the market, and its three-year returns were badly behind the market, so it might surprise you to find that its five-year returns are beating the market!
Thanks in large part to a stellar 2021 -- during which its shares skyrocketed 118.4% on a total return basis -- Nucor's five-year performance is crushing the market like an empty steel can. Nucor's shares are up 209.4% on a total return basis since Dec. 8, 2020, while the S&P 500's total returns are just 100.3%. Put another way, while the S&P basically doubled in value over the last five years, Nucor's stock has more than tripled.
This goes to show that when investing in a cyclical industry like steel, your returns will vary a lot depending on where you are in the cycle. However, buying and holding quality companies over the long term positions investors to weather the short-term cyclical trends.
