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Is Steel Dynamics (STLD) an Incredible Growth Stock? 3 Reasons Why It Will Be Tough to Beat
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Finding a great growth stock can be a tough task. Not only are there a wide range of choices, but the space can be extremely volatile and fraught with risk as well. But thanks to our new style score system we have been able to identify a few growth stocks which have incredible potential in the near term.
One such company that stands out in this regard is undoubtedly Steel Dynamics Inc. (STLD - Free Report) . Not only does this company have a favorable growth score, but it is ranked as a buy too. And while there are numerous reasons why STLD is so attractive right now, we have highlighted three of the most important—and pertinent to growth investors—below:
Earnings Growth for STLD
Arguably nothing is more important than earnings growth as surging profit levels is what most investors are after. And for growth investors, earnings growth in the double digits is definitely necessary and it is often an indication of strong prospects (and stock price gains) ahead for the company in question.
While STLD has put up a historical EPS growth rate of 166.7%, investors should really focus on the projected growth. Here, STLD is looking to grow at a rate of 144.4%, thoroughly crushing the industry average which calls for EPS growth of 106.7%in comparison.
Sales/Assets Ratio is Impressive for Steel Dynamics Stock
The sales/asset ratio is often overlooked by investors, but it can be an important indicator in growth investing nonetheless. This metric—also known as S/TA for short—shows us how much sales are generated from the company’s assets which can indicate that a firm is using its assets effectively.
Right now Steel Dynamics has a S/TA ratio of 1.14 which means that the company gets $1.14 in sales for each dollar in assets. Compare this to the industry average which is a ratio of 0.92 and you can say that STLD is a bit more efficient than the industry at large.
But if you are worried that this ratio is too technical, consider how STLD is positioned from a sales growth perspective. Steel Dynamics is projected to see sales growth this year of 2.4%, crushing the industry average of -5.7% and further underscoring the company’s title as a great growth stock.
STLD Earnings Estimate Revisions Moving in the Right Direction
If the metrics outlined above weren’t enough investors should also consider the positive trends that we are seeing on the analyst estimate revision front. Analysts have been raising their estimates for Steel Dynamics lately, and now the earnings picture is looking a bit more favorable for the company.
Over the past 60 days, 7 EPS estimates have been revised higher compared to none lower, at least for the current year time frame. And the magnitude of these revisions has also been impressive, as the consensus estimate for the full year has surged from $1.57 per share to $1.85 per share today.
Bottom Line
For the reasons outlined above, investors shouldn’t be surprised to note that Steel Dynamics has earned itself a growth score of ‘A’ as well as a Zacks Rank #2 (Buy). This means that we believe Steel Dynamics stock is a potential outperformer that is an impressive choice for growth investors, making it a security that you need to keep on your radar in the near term.
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Is Steel Dynamics (STLD) an Incredible Growth Stock? 3 Reasons Why It Will Be Tough to Beat
Finding a great growth stock can be a tough task. Not only are there a wide range of choices, but the space can be extremely volatile and fraught with risk as well. But thanks to our new style score system we have been able to identify a few growth stocks which have incredible potential in the near term.
One such company that stands out in this regard is undoubtedly Steel Dynamics Inc. (STLD - Free Report) . Not only does this company have a favorable growth score, but it is ranked as a buy too. And while there are numerous reasons why STLD is so attractive right now, we have highlighted three of the most important—and pertinent to growth investors—below:
Earnings Growth for STLD
Arguably nothing is more important than earnings growth as surging profit levels is what most investors are after. And for growth investors, earnings growth in the double digits is definitely necessary and it is often an indication of strong prospects (and stock price gains) ahead for the company in question.
While STLD has put up a historical EPS growth rate of 166.7%, investors should really focus on the projected growth. Here, STLD is looking to grow at a rate of 144.4%, thoroughly crushing the industry average which calls for EPS growth of 106.7%in comparison.
Sales/Assets Ratio is Impressive for Steel Dynamics Stock
The sales/asset ratio is often overlooked by investors, but it can be an important indicator in growth investing nonetheless. This metric—also known as S/TA for short—shows us how much sales are generated from the company’s assets which can indicate that a firm is using its assets effectively.
Right now Steel Dynamics has a S/TA ratio of 1.14 which means that the company gets $1.14 in sales for each dollar in assets. Compare this to the industry average which is a ratio of 0.92 and you can say that STLD is a bit more efficient than the industry at large.
But if you are worried that this ratio is too technical, consider how STLD is positioned from a sales growth perspective. Steel Dynamics is projected to see sales growth this year of 2.4%, crushing the industry average of -5.7% and further underscoring the company’s title as a great growth stock.
STLD Earnings Estimate Revisions Moving in the Right Direction
If the metrics outlined above weren’t enough investors should also consider the positive trends that we are seeing on the analyst estimate revision front. Analysts have been raising their estimates for Steel Dynamics lately, and now the earnings picture is looking a bit more favorable for the company.
STEEL DYNAMICS Price and Consensus
STEEL DYNAMICS Price and Consensus | STEEL DYNAMICS Quote
Over the past 60 days, 7 EPS estimates have been revised higher compared to none lower, at least for the current year time frame. And the magnitude of these revisions has also been impressive, as the consensus estimate for the full year has surged from $1.57 per share to $1.85 per share today.
Bottom Line
For the reasons outlined above, investors shouldn’t be surprised to note that Steel Dynamics has earned itself a growth score of ‘A’ as well as a Zacks Rank #2 (Buy). This means that we believe Steel Dynamics stock is a potential outperformer that is an impressive choice for growth investors, making it a security that you need to keep on your radar in the near term.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>