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Steel Dynamics Sees Higher Q2 Earnings

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Steel Dynamics (STLD - Free Report) has divulged its guidance for second-quarter 2014. The Indiana-based steel maker envisions earnings in the band of 28 cents to 32 cents per share for the quarter.

The projected earnings are higher than Steel Dynamics’ first-quarter 2014 earnings of 17 cents per share and second-quarter 2013 earnings of 13 cents per share. Analysts polled by Zacks are currently expecting earnings of 31 cents per share on an average for second-quarter 2014.

Steel Dynamics sees higher profits from its steel operations in the second quarter on a sequential comparison basis. It expects both shipments and metal spreads to improve across the steel operating platform, notwithstanding significantly higher import activities.

Steel Dynamics noted that slowdown in the domestic market as witnessed in the first quarter due to harsh winter weather has subsided. It expects favorable demand trends from major steel end-use markets, especially across automotive, manufacturing and construction.

According to the company, the residential construction end-market is rebounding, helped by more temperate climate conditions. Moreover, the non-residential construction market is also showing positive trends based on higher demand for Steel Dynamics' structural steel and fabricated steel joist and decking products.  

Steel Dynamics expects profitability from its fabrication operations to increase in the second quarter on the back of higher volumes and margins. The results from the company’s metals recycling business are also expected to improve sequentially in the quarter as increased shipments more than offset a decline in ferrous margins due to decreased selling values.

Steel Dynamics saw its profit slip 20% year over year in first-quarter 2014 as severe winter weather, especially in the Midwest, led to higher energy costs, lower production as well as reduced transportation availability that delayed shipments.

Steel Dynamics, a Zacks Rank #3 (Hold) stock, is among the biggest steel producers and metals recyclers in the U.S. based on estimated annual steelmaking and metals recycling capacity.

Other companies in the steel industry with favorable Zacks Rank are Universal Stainless & Alloy Products Inc. (USAP - Free Report) , Grupo Simec S.A.B. de C.V. (SIM - Free Report) and ThyssenKrupp AG . While Universal Stainless holds a Zacks Rank #1 (Strong Buy), both Grupo Simec and ThyssenKrupp retain a Zacks Rank #2 (Buy).

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