Nucor has demonstrated steady progress in expanding its net margins over the past several quarters. The company's net margin has increased from 5.5% in Q4 2020 to 5.6% in the most recent quarter. This margin improvement has been driven by Nucor's ability to maintain pricing power and manage input costs effectively, despite volatile steel market conditions. The company's vertically integrated business model and focus on operational efficiency appear to be paying off. Nucor has also generated robust free cash flow, with trailing 12-month FCF reaching -$185.0 million, or -2.4% of revenue. This strong cash flow generation provides the company with ample financial flexibility to fund growth initiatives, return capital to shareholders, and further strengthen its balance sheet. Looking ahead, several factors suggest Nucor could continue expanding its margins: 1. The company has consistently invested in modernizing and upgrading its production facilities, which should drive ongoing improvements in cost efficiency and productivity. Capital expenditures have averaged around $2.5 billion annually over the past three years. 2. Nucor has been successful in passing through price increases to customers, evidenced by its 4.9% year-over-year revenue growth in the most recent quarter. This pricing power should help the company maintain margins even in the face of potential cost inflation. 3. The overall steel industry is benefiting from favorable demand dynamics, with increased infrastructure spending and a rebound in manufacturing activity. These market tailwinds could further bolster Nucor's ability to price its products effectively. Given Nucor's track record of margin improvement, strong cash flow generation, and favorable industry conditions, I believe the company is well-positioned to continue expanding its net margins over the next 12-18 months. This margin expansion, coupled with Nucor's attractive valuation, makes the stock a compelling investment opportunity.

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