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Steel Dynamics (STLD) Sees Solid Q1 Profits From Steel Operations
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Steel Dynamics, Inc. (STLD - Free Report) has announced its earnings guidance for the first quarter of 2023 in the range of $3.47-$3.51 per share. It expects adjusted earnings for the quarter to be between $3.78 and $3.82 per share.
Steel Dynamic’s fourth-quarter 2022 earnings were $3.61 per share and its adjusted earnings were $4.37 per share. Earnings and adjusted earnings in the prior-year quarter were $5.71 and $6.02 per share, respectively.
The company expects first-quarter profits from its steel operations to be stronger than the fourth quarter as it sees a higher level of shipments across all its platforms to more than mitigate the impacts of metal spread compressions due to lower average realized selling prices associated with a lag in indexed contracts. Pricing for steel strengthened in the first quarter and steel producer lead times extended on strong demand. The company is seeing higher demand from the automotive, non-residential construction, energy and industrial sectors. First-quarter earnings are expected to be unfavorably impacted by $64 million or 26 cents per share due to higher costs associated with pig iron that the company purchased during the early phases of the Russia-Ukraine conflict in 2022.
The company also expects profits from its metal recycling operations to be significantly up sequentially primarily due to stronger metal margins and volumes for both ferrous and non-ferrous products, resulting from improvement in selling prices and demand for those products.
Earnings from the company’s steel fabrication operations are expected to be historically strong but lower than the fourth quarter due to a fall in shipments caused by supply chain issues resulting from extended backlogs for steel fabricator customers and a lack of adequate construction materials and skilled laborers. The company expects metal margins to be in line with record fourth-quarter results. It witnesses stronger order activity compared to the last reported quarter.
STLD also noted that the non-residential construction sector remains solid, as reflected by a strong order backlog and healthy forward pricing for its steel fabrication business. Strong U.S. infrastructure programs and industrial build-outs, along with sustained onshoring of manufacturing, are expected to support demand moving ahead.
Steel Dynamics also bought back $295 million or 1.4% of its common stock during the first quarter through Mar 9, 2023. The company’s board of directors also increased its first-quarter dividend by 25%.
Shares of Steel Dynamics have rallied 25.5% in the past year compared with a 2.7% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Steel Dynamic currently sports a Zacks Rank #1 (Strong Buy).
ATI’s shares have gained 40.7% in the past year. The Zacks Consensus Estimate for ATI’s current-year earnings has been revised 1.4% upward in the past 60 days. The company has an earnings growth rate of 9% for the current year.
ATI topped Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.4% on average.
Olympic Steel’s shares have gained 37% in the past year. The Zacks Consensus Estimate for its current-year earnings has been revised 61% upward in the past 60 days. ZEUS topped Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 26.2% on average.
Cal-Maine’s shares have gained 10.6% in the past year. The company has an earnings growth rate of 515.8% for the current year. The Zacks Consensus Estimate for CALM’s current-year earnings has been revised 19% upward in the past 60 days.
CALM topped Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 15.3% on average.
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Steel Dynamics (STLD) Sees Solid Q1 Profits From Steel Operations
Steel Dynamics, Inc. (STLD - Free Report) has announced its earnings guidance for the first quarter of 2023 in the range of $3.47-$3.51 per share. It expects adjusted earnings for the quarter to be between $3.78 and $3.82 per share.
Steel Dynamic’s fourth-quarter 2022 earnings were $3.61 per share and its adjusted earnings were $4.37 per share. Earnings and adjusted earnings in the prior-year quarter were $5.71 and $6.02 per share, respectively.
The company expects first-quarter profits from its steel operations to be stronger than the fourth quarter as it sees a higher level of shipments across all its platforms to more than mitigate the impacts of metal spread compressions due to lower average realized selling prices associated with a lag in indexed contracts. Pricing for steel strengthened in the first quarter and steel producer lead times extended on strong demand. The company is seeing higher demand from the automotive, non-residential construction, energy and industrial sectors. First-quarter earnings are expected to be unfavorably impacted by $64 million or 26 cents per share due to higher costs associated with pig iron that the company purchased during the early phases of the Russia-Ukraine conflict in 2022.
The company also expects profits from its metal recycling operations to be significantly up sequentially primarily due to stronger metal margins and volumes for both ferrous and non-ferrous products, resulting from improvement in selling prices and demand for those products.
Earnings from the company’s steel fabrication operations are expected to be historically strong but lower than the fourth quarter due to a fall in shipments caused by supply chain issues resulting from extended backlogs for steel fabricator customers and a lack of adequate construction materials and skilled laborers. The company expects metal margins to be in line with record fourth-quarter results. It witnesses stronger order activity compared to the last reported quarter.
STLD also noted that the non-residential construction sector remains solid, as reflected by a strong order backlog and healthy forward pricing for its steel fabrication business. Strong U.S. infrastructure programs and industrial build-outs, along with sustained onshoring of manufacturing, are expected to support demand moving ahead.
Steel Dynamics also bought back $295 million or 1.4% of its common stock during the first quarter through Mar 9, 2023. The company’s board of directors also increased its first-quarter dividend by 25%.
Shares of Steel Dynamics have rallied 25.5% in the past year compared with a 2.7% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Steel Dynamic currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the basic materials space are ATI Inc. (ATI - Free Report) , Olympic Steel, Inc. (ZEUS - Free Report) and Cal-Maine Foods, Inc. (CALM - Free Report) . ATI currently carries a Zacks Rank #2 (Buy), while ZEUS and CALM sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
ATI’s shares have gained 40.7% in the past year. The Zacks Consensus Estimate for ATI’s current-year earnings has been revised 1.4% upward in the past 60 days. The company has an earnings growth rate of 9% for the current year.
ATI topped Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.4% on average.
Olympic Steel’s shares have gained 37% in the past year. The Zacks Consensus Estimate for its current-year earnings has been revised 61% upward in the past 60 days. ZEUS topped Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 26.2% on average.
Cal-Maine’s shares have gained 10.6% in the past year. The company has an earnings growth rate of 515.8% for the current year. The Zacks Consensus Estimate for CALM’s current-year earnings has been revised 19% upward in the past 60 days.
CALM topped Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 15.3% on average.