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Steel Dynamics (STLD) Sees Solid Q2 Steel Operation Earnings
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Steel Dynamics, Inc. (STLD - Free Report) has provided its earnings guidance for the second quarter of 2023. The company expects earnings per share in the range of $4.78-$4.82, indicating an improvement from first-quarter earnings of $3.70 per share. However, the expected range is lower than earnings of $6.44 per share reported in the second quarter of the previous year.
The profitability of the company's steel operations is projected to be considerably stronger in the second quarter of 2023 compared to the first quarter. This is attributed to the expansion of metal spreads, where realized selling values are expected to surpass slightly higher scrap costs. Additionally, the Sinton Texas Flat Roll Steel Mill is anticipated to contribute positively to EBITDA in the second quarter as it continues its ramp-up. Steel order activity remains robust in various sectors, including automotive, construction, industrial, and energy. The company also expects low customer inventory levels to reduce destocking and support steel product pricing.
The company expects steady earnings from its metals recycling operations in the second quarter of 2023, with increased ferrous scrap shipments offsetting lower metal spreads. However, earnings from steel fabrication operations are projected to be historically strong but lower than the previous quarter. Delays in certain projects, supply-chain constraints, extended backlogs, and a shortage of construction materials and labor are impacting performance.
Metal margins are also anticipated to be lower due to reduced product pricing and higher steel costs sequentially. Nevertheless, the company maintains a steady order entry and a strong order backlog with favorable forward pricing. The non-residential construction sector remains robust, supported by solid demand for long-product steels and the ongoing onshoring of manufacturing. The strong U.S. infrastructure program and industrial build-outs further contribute to future demand.
Based on its confidence in earnings and cash flow generation, STLD repurchased $364 million, equivalent to 2% of its common stock, during the second quarter of 2023 through Jun 9.
The company has gained 42.7% in the past year, compared with the industry’s 29% rise in the same period.
Image Source: Zacks Investment Research
The company witnessed a 19% decline in net sales for its steel operations in the first quarter, reaching $3,060.8 million, primarily due to lower realized selling prices and higher metal spread compressions in flat-rolled operations. However, record steel shipments of 3.3 million offset some of the declines. Metal's recycling operations saw a 0.7% rise in net sales, reaching $583.4 million, thanks to increased volumes and pricing of ferrous and non-ferrous materials. Steel fabrication operations reported sales of approximately $868.8 million, down 6.6% from the previous year, impacted by seasonal factors leading to lower shipments. Despite this, order entry showed strength, driven by non-residential construction markets in the first quarter.
The Zacks Consensus Estimate for L.B. Foster’s current-year earnings is pegged at 53 cents per share, indicating year-over-year growth of 112.5%. The company’s shares have gained around 6.7% over the past year. FSTR beat the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 140.5%, on average.
Gold Fields currently carries a Zacks Rank #1. The Zacks Consensus Estimate for GFI’s current-year earnings has been revised 4% upward in the past 60 days. The consensus estimate for current-year earnings for GFI is currently pegged at $1.05, implying year-over-year growth of 8.3%. Gold Fields’ shares have rallied roughly 51% in the past year.
The Zacks Consensus Estimate for Linde’s current-year earnings has been revised 4.4% upward in the past 60 days. LIN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 6.9%. The company’s shares have gained 29.1% in the past year.
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Steel Dynamics (STLD) Sees Solid Q2 Steel Operation Earnings
Steel Dynamics, Inc. (STLD - Free Report) has provided its earnings guidance for the second quarter of 2023. The company expects earnings per share in the range of $4.78-$4.82, indicating an improvement from first-quarter earnings of $3.70 per share. However, the expected range is lower than earnings of $6.44 per share reported in the second quarter of the previous year.
The profitability of the company's steel operations is projected to be considerably stronger in the second quarter of 2023 compared to the first quarter. This is attributed to the expansion of metal spreads, where realized selling values are expected to surpass slightly higher scrap costs. Additionally, the Sinton Texas Flat Roll Steel Mill is anticipated to contribute positively to EBITDA in the second quarter as it continues its ramp-up. Steel order activity remains robust in various sectors, including automotive, construction, industrial, and energy. The company also expects low customer inventory levels to reduce destocking and support steel product pricing.
The company expects steady earnings from its metals recycling operations in the second quarter of 2023, with increased ferrous scrap shipments offsetting lower metal spreads. However, earnings from steel fabrication operations are projected to be historically strong but lower than the previous quarter. Delays in certain projects, supply-chain constraints, extended backlogs, and a shortage of construction materials and labor are impacting performance.
Metal margins are also anticipated to be lower due to reduced product pricing and higher steel costs sequentially. Nevertheless, the company maintains a steady order entry and a strong order backlog with favorable forward pricing. The non-residential construction sector remains robust, supported by solid demand for long-product steels and the ongoing onshoring of manufacturing. The strong U.S. infrastructure program and industrial build-outs further contribute to future demand.
Based on its confidence in earnings and cash flow generation, STLD repurchased $364 million, equivalent to 2% of its common stock, during the second quarter of 2023 through Jun 9.
The company has gained 42.7% in the past year, compared with the industry’s 29% rise in the same period.
Image Source: Zacks Investment Research
The company witnessed a 19% decline in net sales for its steel operations in the first quarter, reaching $3,060.8 million, primarily due to lower realized selling prices and higher metal spread compressions in flat-rolled operations. However, record steel shipments of 3.3 million offset some of the declines. Metal's recycling operations saw a 0.7% rise in net sales, reaching $583.4 million, thanks to increased volumes and pricing of ferrous and non-ferrous materials. Steel fabrication operations reported sales of approximately $868.8 million, down 6.6% from the previous year, impacted by seasonal factors leading to lower shipments. Despite this, order entry showed strength, driven by non-residential construction markets in the first quarter.
Steel Dynamics, Inc. Price and Consensus
Steel Dynamics, Inc. price-consensus-chart | Steel Dynamics, Inc. Quote
Zacks Rank & Key Picks
Steel Dynamics currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space include L.B. Foster Company (FSTR - Free Report) , carrying a Zacks Rank #1 (Strong Buy), and Gold Fields Limited (GFI - Free Report) , and Linde Plc (LIN - Free Report) , carrying a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for L.B. Foster’s current-year earnings is pegged at 53 cents per share, indicating year-over-year growth of 112.5%. The company’s shares have gained around 6.7% over the past year. FSTR beat the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 140.5%, on average.
Gold Fields currently carries a Zacks Rank #1. The Zacks Consensus Estimate for GFI’s current-year earnings has been revised 4% upward in the past 60 days. The consensus estimate for current-year earnings for GFI is currently pegged at $1.05, implying year-over-year growth of 8.3%. Gold Fields’ shares have rallied roughly 51% in the past year.
The Zacks Consensus Estimate for Linde’s current-year earnings has been revised 4.4% upward in the past 60 days. LIN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 6.9%. The company’s shares have gained 29.1% in the past year.