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Steel Dynamics (STLD) to Post Q2 Earnings: What's in the Cards?

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Steel Dynamics, Inc. (STLD - Free Report) is set to release second-quarter 2021 results after the closing bell on Jul 19. The company’s results will likely reflect the benefits of higher steel prices and strong end-market demand.

Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 10.5%, on average. The company posted an earnings surprise of around 6.1% in the last reported quarter.

Shares of the company have rallied 126.5% in the past year compared with 135.6% rise of the industry.

 

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

What do the Estimates Say?

Steel Dynamics envisions second-quarter earnings in the range of $3.26-$3.30 per share. It also expects adjusted earnings in the range of $3.34-$3.38 per share, which will set record quarterly earnings for the company.

The Zacks Consensus Estimate for revenues for Steel Dynamics for the to-be-reported quarter is at $4,166 million, suggesting a year-over-year rise of 98.9%.

A Few Factors to Watch

The company’s second-quarter results are likely to have benefited from demand strength across key markets and higher domestic steel prices. Strong demand across automotive and construction market is expected to have aided its performance.  

Steel Dynamics, last month, said that steel demand in the United States remained strong in the second quarter. Higher demand is likely to have supported the company’s shipments for the quarter.

Higher steel selling prices underpinned by low flat roll steel inventories and strong demand are also likely to have boosted profitability of the company’s steel operations in the second quarter. The company is also expected to have benefited from metal spread expansion.

U.S. steel prices are on a tear supported by strong underlying supply and demand fundamentals. Strong demand, supply shortages and higher raw material costs have led to a surge in domestic steel prices. The benchmark hot-rolled coil (“HRC”) prices have hit record levels after plummeting to pandemic-induced multi-year lows in August 2020. Notably, HRC prices have shot up roughly fourfold from the August low of $440 per short ton.

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

 

Zacks Model

Our proven model does not conclusively predict an earnings beat for Steel Dynamics this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Steel Dynamics is 0.00%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at $3.42. 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 #1.

Stocks That Warrant a Look

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

Cabot Corporation (CBT - Free Report) , scheduled to release earnings on Aug 9, has an Earnings ESP of +14.81% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutrien Ltd. (NTR - Free Report) , scheduled to release earnings on Aug 9, has an Earnings ESP of +1.80% and carries a Zacks Rank #1.

Dow Inc. (DOW - Free Report) , scheduled to release earnings on Jul 22, has an Earnings ESP of +3.50% and carries a Zacks Rank #2.
 


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