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Steel Dynamics' (STLD) Earnings and Sales Top Estimates in Q3

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Steel Dynamics, Inc. (STLD - Free Report) logged a net income of $914.3 million or $5.03 per share in third-quarter 2022 compared with $990.8 million or $4.85 in the year-ago quarter.

Barring one-time items, adjusted earnings per share came in at $5.46, topping the Zacks Consensus Estimate of $4.97.

Net sales in the quarter increased roughly 11% year over year to a record $5,651.7 million. The figure beat the Zacks Consensus Estimate of $5,478.4 million.

 

Steel Dynamics, Inc. Price, Consensus and EPS Surprise

 

Steel Dynamics, Inc. Price, Consensus and EPS Surprise

Steel Dynamics, Inc. price-consensus-eps-surprise-chart | Steel Dynamics, Inc. Quote

 

Segment Highlights

Net sales in the company's steel operations rose around 1% year over year to $3,720.8 million in the reported quarter. Operating income fell roughly 51% year over year to $658.3 million. The average product selling price for the unit fell around 11% year over year to $1,381 per ton in the reported quarter. The company registered record steel shipments of around 3.2 million tons in the reported quarter, driven by steady steel demand.

The company's steel fabrication operations raked in sales of around $1,140.3 million, up around 131% year over year. The segment posted an operating income of $676.8 million, up from an operating income of $89.4 million in the year-ago quarter. The company witnessed strong demand from the non-residential construction market.

Net sales in metals recycling operations declined around 20% year over year to $472.1 million. Operating income fell roughly 79% year over year to $9.9 million.

Financial Position

Steel Dynamics ended the quarter with cash and cash equivalents of $1,420.5 million, up around 30% from the year-ago quarter’s levels. Long-term debt was $3,012.1 million, essentially flat year over year.

The company generated $1.5 billion of cash flow from operations in the third quarter. It also repurchased $482 million of its common stock during the quarter.

Outlook

Steel Dynamics stated that customer order entry activity remains healthy across its businesses. It sees seasonally moderated volume in steel and metals recycling operations in the coming months. Its order activity and backlog remain strong notwithstanding softer flat rolled steel pricing.

The company expects steel consumption in North America to remain steady. It also anticipates demand for lower-carbon, U.S.-produced steel products and lower imports to support steel pricing. Moreover, order backlog in its steel fabrication operations remains historically high based on volume and forward pricing levels.

Price Performance

Shares of Steel Dynamics have gained 35.8% in the past year against a 16.5% decline of the industry.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Zacks Rank & Other Key Picks

Steel Dynamics currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Albemarle Corporation (ALB - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) and Ryerson Holding Corporation (RYI - Free Report) .

Albemarle, currently sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 426.7% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 5% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 10% in a year.

Sociedad has a projected earnings growth rate of 530.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 2.1% upward in the past 60 days.

Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 70% in a year. The company currently carries a Zacks Rank #1.

Ryerson Holding, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 74.2% for the current year. The consensus estimate for RYI's earnings for the current year has been revised 3.2% upward in the past 60 days.

Ryerson Holding’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 28.9%. RYI has gained around 22% over a year.

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