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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 3.8%, on average. The company posted an earnings surprise of 6.2% in the last reported quarter. Its third-quarter results will likely reflect the benefits of healthy end-market demand. However, lower prices might have impacted its performance.
Shares of the company have gained 25% in the past year compared with 20.6% decline of the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
Steel Dynamics envisions third-quarter earnings in the range of $4.93-$4.97 per share. Adjusted earnings have been forecast in the band of $5.33-$5.37 per share.
The Zacks Consensus Estimate for revenues for Steel Dynamics for the to-be-reported quarter is at $5,478 million, suggesting a year-over-year rise of 7.7%.
The consensus estimate for average external product selling price for the company's steel operations is pegged at $1,369 per ton, indicating a year-over-year decline of 11.7% and a decline of 11% on a sequential comparison basis.
A Few Factors to Watch
Healthy demand across automotive, construction and industrial markets is expected to have aided Steel Dynamics’ third-quarter performance. Strength in the non-residential construction sector continues as reflected by strong order activities. However, weaker sequential profitability in its steel operations might have impacted its results.
Steel Dynamics, last month, said that it expects third-quarter profitability from its steel operations to be historically strong but considerably lower than second-quarter 2022 levels. The downside is likely to be have been caused by lower earnings from the company's flat roll steel operations, as reduced average flat roll pricing is expected to have more than offset projected higher shipments and lower raw material costs.
U.S. steel prices have witnessed a significant downward correction. After surging to nearly $1,500 per short ton in April 2022 due to supply concerns stemming from the Russia-Ukraine war, the benchmark hot-rolled coil ("HRC") prices have retreated and fallen below the $800 per short ton level. The downward drift partly reflects shorter lead times. Mills are also negotiating lower prices for new orders. Fears of a recession have also impacted prices. The impacts of weaker prices are likely to reflect on Steel Dynamics’ revenues and margins in the quarter to be reported.
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 third quarter is currently pegged at $4.97. 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.
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:
The consensus estimate for Albemarle’s third-quarter earnings has been revised 9% upward in the past 60 days. The Zacks Consensus Estimate for ALB’s earnings for the quarter is pegged at $6.81.
Koppers Holdings Inc. (KOP - Free Report) , expected to release earnings on Nov 3, has an Earnings ESP of +2.28% and carries a Zacks Rank #2.
The Zacks Consensus Estimate for Koppers’ third-quarter earnings has been revised 2.6% upward in the past 60 days. The consensus estimate for KOP’s earnings for the quarter is currently pegged at $1.17.
FMC Corporation (FMC - Free Report) , scheduled to release earnings on Nov 1, has an Earnings ESP of +0.30%.
The Zacks Consensus Estimate for FMC' earnings for the third quarter is currently pegged at $1.11. FMC currently carries a Zacks Rank #3.
Image: Bigstock
Steel Dynamics (STLD) to Post Q3 Earnings: What's in the Offing?
Steel Dynamics, Inc. (STLD - Free Report) is set to release third-quarter 2022 results after the closing bell on Oct 19.
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 3.8%, on average. The company posted an earnings surprise of 6.2% in the last reported quarter. Its third-quarter results will likely reflect the benefits of healthy end-market demand. However, lower prices might have impacted its performance.
Shares of the company have gained 25% in the past year compared with 20.6% decline of the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
Steel Dynamics envisions third-quarter earnings in the range of $4.93-$4.97 per share. Adjusted earnings have been forecast in the band of $5.33-$5.37 per share.
The Zacks Consensus Estimate for revenues for Steel Dynamics for the to-be-reported quarter is at $5,478 million, suggesting a year-over-year rise of 7.7%.
The consensus estimate for average external product selling price for the company's steel operations is pegged at $1,369 per ton, indicating a year-over-year decline of 11.7% and a decline of 11% on a sequential comparison basis.
A Few Factors to Watch
Healthy demand across automotive, construction and industrial markets is expected to have aided Steel Dynamics’ third-quarter performance. Strength in the non-residential construction sector continues as reflected by strong order activities. However, weaker sequential profitability in its steel operations might have impacted its results.
Steel Dynamics, last month, said that it expects third-quarter profitability from its steel operations to be historically strong but considerably lower than second-quarter 2022 levels. The downside is likely to be have been caused by lower earnings from the company's flat roll steel operations, as reduced average flat roll pricing is expected to have more than offset projected higher shipments and lower raw material costs.
U.S. steel prices have witnessed a significant downward correction. After surging to nearly $1,500 per short ton in April 2022 due to supply concerns stemming from the Russia-Ukraine war, the benchmark hot-rolled coil ("HRC") prices have retreated and fallen below the $800 per short ton level. The downward drift partly reflects shorter lead times. Mills are also negotiating lower prices for new orders. Fears of a recession have also impacted prices. The impacts of weaker prices are likely to reflect on Steel Dynamics’ revenues and margins in the quarter to be reported.
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 third quarter is currently pegged at $4.97. 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.
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:
Albemarle Corporation (ALB - Free Report) , scheduled to release earnings on Nov 2, has an Earnings ESP of +8.13% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Albemarle’s third-quarter earnings has been revised 9% upward in the past 60 days. The Zacks Consensus Estimate for ALB’s earnings for the quarter is pegged at $6.81.
Koppers Holdings Inc. (KOP - Free Report) , expected to release earnings on Nov 3, has an Earnings ESP of +2.28% and carries a Zacks Rank #2.
The Zacks Consensus Estimate for Koppers’ third-quarter earnings has been revised 2.6% upward in the past 60 days. The consensus estimate for KOP’s earnings for the quarter is currently pegged at $1.17.
FMC Corporation (FMC - Free Report) , scheduled to release earnings on Nov 1, has an Earnings ESP of +0.30%.
The Zacks Consensus Estimate for FMC' earnings for the third quarter is currently pegged at $1.11. FMC currently carries a Zacks Rank #3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.