Back to top

Image: Bigstock

Steel Dynamics (STLD) to Post Q4 Earnings: What's in the Cards?

Read MoreHide Full Article

Steel Dynamics, Inc. STLD is set to release fourth-quarter 2020 results after the closing bell on Jan 25.

The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 9.1%. It delivered an earnings surprise of 8.5% in the last reported quarter.

The stock has gained 25.3% in the past year compared with the industry’s 24.5% rise.




Let’s see how things are shaping up for the upcoming announcement.

Zacks Model

Our proven model predicts an earnings beat for Steel Dynamics this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for Steel Dynamics is +1.75%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at 86 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Steel Dynamics currently carries a Zacks Rank #3.

What do the Estimates Say?

The company, last month, issued earnings guidance for the fourth quarter. It expects earnings per share between 72 cents and 76 cents for the quarter. It also anticipates adjusted earnings per share to be between 80 cents and 84 cents.

The Zacks Consensus Estimate for fourth-quarter consolidated revenues for Steel Dynamics is currently pegged at $2,501 million, reflecting a year-over-year rise of 5.5%.

Moreover, the Zacks Consensus Estimate for shipments for the company’s steel operations for the quarter currently stands at 2,305,420 tons, essentially flat year over year. The consensus estimate for average product selling price for steel operations stands at $787, suggesting a 3% year-over-year increase.

A Few Factors to Watch

The company’s fourth-quarter results are likely to have benefited from demand strength across key markets and improved domestic steel prices. A strong rebound in the automotive market and a resilient construction market are expected to have aided its performance.  

Steel Dynamics, last month, said that domestic demand for steel remains strong, as automotive and construction sectors gain momentum. Average realized quarterly flat roll steel product pricing is expected to have increased significantly during the fourth quarter. Higher selling value for steel and order entry activity is also backed by strong demand and historically low steel inventories. The company sees earnings from its steel operations are expected to be higher sequentially due to flat roll metal spread expansion and steady total steel shipments.

Meanwhile, steel prices are on an upswing on the back of rising demand, supply shortages and higher raw material costs. Notably, U.S. steel prices have staged a strong recovery and hit record levels after cratering to pandemic-induced multi-year lows in August 2020. The benchmark hot-rolled coil (“HRC”) prices started to recover in September and are shooting up since then. Prices zoomed past the $1,000 per short level in the last week of December amid tight supply and surging demand. Notably, HRC prices have surged to levels not seen in more than 10 years and doubled the lows witnessed in August.

As such, higher domestic steel prices are likely to have boosted Steel Dynamics’ selling prices and supported its revenues and margins in the to-be-reported quarter.


Steel Dynamics, Inc. Price and EPS Surprise


Steel Dynamics, Inc. Price and EPS Surprise

Steel Dynamics, Inc. price-eps-surprise | Steel Dynamics, Inc. Quote


Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

LyondellBasell Industries N.V. LYB, scheduled to release earnings on Jan 29, has an Earnings ESP of +10.12% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese Corporation CE, scheduled to release earnings on Jan 28, has an Earnings ESP of +2.38% and carries a Zacks Rank #2.

FMC Corporation (FMC - Free Report) , scheduled to release earnings on Feb 9, has an Earnings ESP of +2.37% and carries a Zacks Rank #2.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

FMC Corporation (FMC) - free report >>