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

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Steel Dynamics, Inc. (STLD - Free Report) is set to release fourth-quarter 2021 results after the closing bell on Jan 24. The company’s results will likely reflect the benefits of higher year-over-year 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 5.1%, on average. The company posted an earnings surprise of 0.2% in the last reported quarter.
 
Shares of the company have rallied 52.2% in the past year compared with 34.9% 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 fourth-quarter earnings in the range of $5.46-$5.5 per share, which suggests a record quarterly performance. Adjusted earnings have been forecast in the band of $5.69-$5.73 per share.

The Zacks Consensus Estimate for revenues for Steel Dynamics for the to-be-reported quarter is at $5,225 million, suggesting a year-over-year rise of 100.9%.

The consensus estimate for average external product selling price for the company's steel operations is pegged at $1,676 per ton, indicating a year-over-year increase of 105.9%.

A Few Factors to Watch

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

Steel Dynamics, last month, said that it expects sequentially higher profit in its steel operations in the fourth quarter, driven by strong underlying steel demand and metal spread expansion across the entire platform. However, the company’s steel shipments for the fourth quarter are likely to have been impacted by year-end seasonality.

The company is also expected to have benefited from higher year-over-year steel prices in the December quarter. U.S. steel prices witnessed a significant rally last year supported by strong underlying supply and demand fundamentals. However, prices have come under pressure since the beginning of the fourth quarter of 2021, partly due to rising production levels.

The benchmark hot-rolled coil (“HRC”) prices have cooled off since October after peaking in September 2021, dragged down by shorter lead times and rising supply. Despite the sharp correction from its peak levels, HRC prices remain elevated. They are well above the year-ago levels and more than three times higher than the August 2020 low of $440 per short ton.

Higher year-over-year domestic steel prices are likely to have boosted Steel Dynamics’ selling prices and supported its revenues and margins in the quarter to be reported.

 

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 fourth quarter is currently pegged at $5.84. 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 #2.

Stocks That Warrant a Look

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

Olin Corporation (OLN - Free Report) , scheduled to release earnings on Jan 27, has an Earnings ESP of +1.95% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Olin's fourth-quarter earnings has been revised 4.1% upward over the past 60 days. The consensus estimate for OLN’s earnings for the quarter is currently pegged at $2.53.

CF Industries Holdings, Inc. (CF - Free Report) , expected to release earnings on Feb 16, has an Earnings ESP of +18.88% and sports a Zacks Rank #1.

The consensus estimate for CF Industries' fourth-quarter earnings has been revised 31.5% upward over the past 60 days. The Zacks Consensus Estimate for CF’s earnings for the quarter stands at $3.05.

Celanese Corporation (CE - Free Report) , scheduled to release earnings on Jan 27, has an Earnings ESP of +2.98% and carries a Zacks Rank #3.

The Zacks Consensus Estimate for Celanese's fourth-quarter earnings has been revised 0.6% upward over the past 60 days. The consensus estimate for CE’s earnings for the quarter is currently pegged at $5.05.


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