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Steel Dynamics (STLD) Stock Up 23% in 6 Months: Here's Why
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Shares of Steel Dynamics, Inc. (STLD - Free Report) have popped around 23% over the last six months. The company has also outperformed its industry's gain of roughly 13% over the same time frame.
Steel Dynamics has a market cap of roughly $10.5 billion and average volume of shares traded in the last three months is around 2,679.5K. The company has expected long-term earnings per share growth of around 12%, just above the industry average of 11.8%.
Let's take a look into the factors that are driving this Zacks Rank #2 (Buy) stock.
What’s Driving STLD?
Forecast-topping earnings performance in the last reported quarter, upbeat outlook and the Trump administration’s trade actions on imported steel have contributed to the rally in Steel Dynamics' shares.
Steel Dynamics topped earnings and revenue expectations in fourth-quarter 2017. Its adjusted earnings of 54 cents per share for the quarter trounced the Zacks Consensus Estimate of 49 cents, translating into a 10.2% positive earnings surprise.
Steel Dynamics, in its fourth-quarter call, said that it expects steel consumption in the automotive market in North America to be steady and the company continues to gain momentum in that space. It also sees sustained additional growth across the construction and energy sectors. The company also noted that it expects the recent tax reform to provide an impetus for additional domestic fixed asset investment and growth.
Steel Dynamics, last month, provided earnings guidance for first-quarter 2018. The company expects earnings to be between 88 cents and 92 cents per share for the quarter. Barring one-time items, adjusted earnings are expected to be higher than 54 cents per share in the previous quarter and 82 cents a year ago.
The company expects profitability from its steel operations to improve sequentially backed by higher shipments and metal spread expansion. Also, pricing of average quarterly steel products is expected to increase more than scrap costs. This is because prices of steel across the platform have been improving throughout the quarter aided by strong steel demand in domestic market.
Moreover, Steel Dynamics expects this improving steel consumption and pricing momentum to continue during the year supported by strong steel demand fundamentals and customer optimism. The company also believes the recent steel trade actions taken by the U.S. Federal Administration are likely to reduce imports.
The Trump administration has slapped a 25% tariff on steel imports aimed at protecting the U.S. steel industry which had long been struggling to cope with an influx of cheap imports. The tariffs are expected to lead to lower imports into the United States, which would in turn boost demand for American steel and drive profitability of U.S. steel makers. The tariffs would also provide a boost to steel prices and give American steel makers more pricing power.
Other top-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report) and Eastman Chemical Company (EMN - Free Report) .
Kronos sports a Zacks Rank #1 (Strong Buy) and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 38% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
LyondellBasell carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 9%. Its shares have gained around 15% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2. Its shares have gained around 29% over a year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Steel Dynamics (STLD) Stock Up 23% in 6 Months: Here's Why
Shares of Steel Dynamics, Inc. (STLD - Free Report) have popped around 23% over the last six months. The company has also outperformed its industry's gain of roughly 13% over the same time frame.
Steel Dynamics has a market cap of roughly $10.5 billion and average volume of shares traded in the last three months is around 2,679.5K. The company has expected long-term earnings per share growth of around 12%, just above the industry average of 11.8%.
Let's take a look into the factors that are driving this Zacks Rank #2 (Buy) stock.
What’s Driving STLD?
Forecast-topping earnings performance in the last reported quarter, upbeat outlook and the Trump administration’s trade actions on imported steel have contributed to the rally in Steel Dynamics' shares.
Steel Dynamics topped earnings and revenue expectations in fourth-quarter 2017. Its adjusted earnings of 54 cents per share for the quarter trounced the Zacks Consensus Estimate of 49 cents, translating into a 10.2% positive earnings surprise.
Steel Dynamics, in its fourth-quarter call, said that it expects steel consumption in the automotive market in North America to be steady and the company continues to gain momentum in that space. It also sees sustained additional growth across the construction and energy sectors. The company also noted that it expects the recent tax reform to provide an impetus for additional domestic fixed asset investment and growth.
Steel Dynamics, last month, provided earnings guidance for first-quarter 2018. The company expects earnings to be between 88 cents and 92 cents per share for the quarter. Barring one-time items, adjusted earnings are expected to be higher than 54 cents per share in the previous quarter and 82 cents a year ago.
The company expects profitability from its steel operations to improve sequentially backed by higher shipments and metal spread expansion. Also, pricing of average quarterly steel products is expected to increase more than scrap costs. This is because prices of steel across the platform have been improving throughout the quarter aided by strong steel demand in domestic market.
Moreover, Steel Dynamics expects this improving steel consumption and pricing momentum to continue during the year supported by strong steel demand fundamentals and customer optimism. The company also believes the recent steel trade actions taken by the U.S. Federal Administration are likely to reduce imports.
The Trump administration has slapped a 25% tariff on steel imports aimed at protecting the U.S. steel industry which had long been struggling to cope with an influx of cheap imports. The tariffs are expected to lead to lower imports into the United States, which would in turn boost demand for American steel and drive profitability of U.S. steel makers. The tariffs would also provide a boost to steel prices and give American steel makers more pricing power.
Steel Dynamics, Inc. Price and Consensus
Steel Dynamics, Inc. Price and Consensus | Steel Dynamics, Inc. Quote
Other Stocks to Consider
Other top-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report) and Eastman Chemical Company (EMN - Free Report) .
Kronos sports a Zacks Rank #1 (Strong Buy) and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 38% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
LyondellBasell carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 9%. Its shares have gained around 15% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2. Its shares have gained around 29% over a year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>