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Steel Dynamics (STLD) Up 26.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Steel Dynamics (STLD - Free Report) . Shares have added about 26.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steel Dynamics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Steel Dynamics' Earnings and Sales Top Estimates in Q1
Steel Dynamics logged net income of $431 million or $2.03 per share in first-quarter 2021, up from $187 million or 88 cents in the year-ago quarter.
Barring one-time items, adjusted earnings per share came in at $2.10, which topped the Zacks Consensus Estimate of $1.98.
Net sales in the quarter increased roughly 37.7% year over year to $3,544.6 million. The figure beat the Zacks Consensus Estimate of $3,275.8 million. The company achieved record quarterly net sales, operating income and adjusted EBITDA, despite pandemic-led challenges.
Segment Highlights
Net sales in the company's steel operations rose around 29.3% year over year to $2,510.7 million in the reported quarter. Operating income increased roughly 119.1% year over year to $641.4 million. Average product selling price for the unit gained roughly 34.5% year over year to $1,041 per ton in the reported quarter. Steel shipments inched down roughly 1% year over year to around 2.82 million tons. Significant metal spread expansion and near-record steel shipments drove operating income.
The company's steel fabrication operations raked in sales of around $256.9 million, up around 16.3% year over year. Operating income declined around 66% to $9.9 million on a year-over-year basis. The decrease in earnings does not reflect weaker demand, as order activity remains solid and customers continue to be optimistic regarding non-residential construction projects.
Net sales in metals recycling operations increased almost 61% year over year to $470 million. The segment’s posted operating income of $53.9 million against operating income of $8.3 million in the year-ago quarter. Demand for recycled scrap and prices increased in the first quarter on higher domestic steel production.
Financial Position
Steel Dynamics ended the first quarter with cash and cash equivalents of $1,245.2 million, down 14.4% year over year. Long-term debt was around $3,016.2 million, up 14% year over year.
The company generated $262 million of cash flow from operations in the first quarter.
Outlook
Steel Dynamics stated that it is witnessing strong steel demand and significantly low customer steel inventory throughout the supply chain. It forecasts that earnings for second-quarter 2021 will be higher than first-quarter levels. The company is optimistic regarding the steel market dynamics in North America. Moreover, U.S. trade policies and existing steel trade cases are expected to continue to moderate steel imports.
The company’s investment in Sinton Texas Flat Roll Steel Mill investment represents transformational competitively-advantaged strategic growth, with associated long-term value creation for shareholders, Steel Dynamics noted.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 14.87% due to these changes.
VGM Scores
At this time, Steel Dynamics has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Steel Dynamics has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Steel Dynamics (STLD) Up 26.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Steel Dynamics (STLD - Free Report) . Shares have added about 26.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steel Dynamics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Steel Dynamics' Earnings and Sales Top Estimates in Q1
Steel Dynamics logged net income of $431 million or $2.03 per share in first-quarter 2021, up from $187 million or 88 cents in the year-ago quarter.
Barring one-time items, adjusted earnings per share came in at $2.10, which topped the Zacks Consensus Estimate of $1.98.
Net sales in the quarter increased roughly 37.7% year over year to $3,544.6 million. The figure beat the Zacks Consensus Estimate of $3,275.8 million. The company achieved record quarterly net sales, operating income and adjusted EBITDA, despite pandemic-led challenges.
Segment Highlights
Net sales in the company's steel operations rose around 29.3% year over year to $2,510.7 million in the reported quarter. Operating income increased roughly 119.1% year over year to $641.4 million. Average product selling price for the unit gained roughly 34.5% year over year to $1,041 per ton in the reported quarter. Steel shipments inched down roughly 1% year over year to around 2.82 million tons. Significant metal spread expansion and near-record steel shipments drove operating income.
The company's steel fabrication operations raked in sales of around $256.9 million, up around 16.3% year over year. Operating income declined around 66% to $9.9 million on a year-over-year basis. The decrease in earnings does not reflect weaker demand, as order activity remains solid and customers continue to be optimistic regarding non-residential construction projects.
Net sales in metals recycling operations increased almost 61% year over year to $470 million. The segment’s posted operating income of $53.9 million against operating income of $8.3 million in the year-ago quarter. Demand for recycled scrap and prices increased in the first quarter on higher domestic steel production.
Financial Position
Steel Dynamics ended the first quarter with cash and cash equivalents of $1,245.2 million, down 14.4% year over year. Long-term debt was around $3,016.2 million, up 14% year over year.
The company generated $262 million of cash flow from operations in the first quarter.
Outlook
Steel Dynamics stated that it is witnessing strong steel demand and significantly low customer steel inventory throughout the supply chain. It forecasts that earnings for second-quarter 2021 will be higher than first-quarter levels. The company is optimistic regarding the steel market dynamics in North America. Moreover, U.S. trade policies and existing steel trade cases are expected to continue to moderate steel imports.
The company’s investment in Sinton Texas Flat Roll Steel Mill investment represents transformational competitively-advantaged strategic growth, with associated long-term value creation for shareholders, Steel Dynamics noted.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 14.87% due to these changes.
VGM Scores
At this time, Steel Dynamics has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Steel Dynamics has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.