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Why Is Steel Dynamics (STLD) Up 3.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Steel Dynamics (STLD - Free Report) . Shares have added about 3.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steel Dynamics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Steel Dynamics' Earnings & Sales Lag Estimates in Q2
Steel Dynamics recorded earnings of $4.81 per share in second-quarter 2023, down 28.5% from the year-ago quarter’s $6.44. It lagged the Zacks Consensus Estimate of $4.82.
Net sales in the second quarter were $5,081.6 million, which missed the Zacks Consensus Estimate of $5,405.5 million. Net sales declined 18.2% from $6,212.9 million reported in the prior-year quarter.
Segment Highlights
Net sales for steel operations were $3,398 million in the second quarter, which reflected a decline of 18% year over year. The company registered steel shipments of 3.2 million in the quarter.
Steel Dynamics' steel operations reported an average external product selling price of $1,257 per ton. Operating income from steel operations more than doubled sequentially to $706 million, attributable to considerable metal spread expansion throughout the platform. This is due to elevated realized selling values offset modestly by higher scrap costs.
Net sales of Metal’s recycling operations were $592 million in the quarter under review, reflecting a decline of 8.9% from the year-ago quarter. Steel Dynamics registered ferrous shipments of around 1.5 million gross tons in the quarter. Demand for ferrous scrap was boosted by slightly greater domestic steel production utilization of more than 76%.
The company's steel fabrication operations raked in sales of around $779 million, down 28.2% year over year. Steel Dynamics registered steel fabrication shipments of 177,819 tons in the quarter.
Financial Position
Steel Dynamics ended the quarter with cash and cash equivalents of $1,475.4 million, down 9.4% from the previous-quarter levels. Long-term debt was $3,010.8 million, declining 0.8% sequentially.
Steel Dynamics generated $807.8 million of cash flow from operations in the quarter. It also repurchased $380 million of its common stock during the quarter, representing 2.2% of its outstanding shares.
Outlook
Steel Dynamics stated that it will remain positive and expect current market conditions to support strong domestic steel demand. The company is also seeing solid order activity across all of its business units. Steel Dynamics anticipates North American steel consumption to rise in the coming years, with increased demand for lower-carbon-emitting, U.S.-made steel products and a fall in import levels supporting steel prices.
Continued onshoring of manufacturing businesses along with expectations of significant fixed asset investment from public funding related to the U.S. Infrastructure, Inflation Reduction Act, and Department of Energy programs, are expected to position the domestic steel industry competitively. Management believes this will help all of its operational platforms, particularly the steel and steel fabrication business.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -6.11% due to these changes.
VGM Scores
Currently, Steel Dynamics has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Steel Dynamics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Steel Dynamics (STLD) Up 3.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Steel Dynamics (STLD - Free Report) . Shares have added about 3.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steel Dynamics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Steel Dynamics' Earnings & Sales Lag Estimates in Q2
Steel Dynamics recorded earnings of $4.81 per share in second-quarter 2023, down 28.5% from the year-ago quarter’s $6.44. It lagged the Zacks Consensus Estimate of $4.82.
Net sales in the second quarter were $5,081.6 million, which missed the Zacks Consensus Estimate of $5,405.5 million. Net sales declined 18.2% from $6,212.9 million reported in the prior-year quarter.
Segment Highlights
Net sales for steel operations were $3,398 million in the second quarter, which reflected a decline of 18% year over year. The company registered steel shipments of 3.2 million in the quarter.
Steel Dynamics' steel operations reported an average external product selling price of $1,257 per ton. Operating income from steel operations more than doubled sequentially to $706 million, attributable to considerable metal spread expansion throughout the platform. This is due to elevated realized selling values offset modestly by higher scrap costs.
Net sales of Metal’s recycling operations were $592 million in the quarter under review, reflecting a decline of 8.9% from the year-ago quarter. Steel Dynamics registered ferrous shipments of around 1.5 million gross tons in the quarter. Demand for ferrous scrap was boosted by slightly greater domestic steel production utilization of more than 76%.
The company's steel fabrication operations raked in sales of around $779 million, down 28.2% year over year. Steel Dynamics registered steel fabrication shipments of 177,819 tons in the quarter.
Financial Position
Steel Dynamics ended the quarter with cash and cash equivalents of $1,475.4 million, down 9.4% from the previous-quarter levels. Long-term debt was $3,010.8 million, declining 0.8% sequentially.
Steel Dynamics generated $807.8 million of cash flow from operations in the quarter. It also repurchased $380 million of its common stock during the quarter, representing 2.2% of its outstanding shares.
Outlook
Steel Dynamics stated that it will remain positive and expect current market conditions to support strong domestic steel demand. The company is also seeing solid order activity across all of its business units. Steel Dynamics anticipates North American steel consumption to rise in the coming years, with increased demand for lower-carbon-emitting, U.S.-made steel products and a fall in import levels supporting steel prices.
Continued onshoring of manufacturing businesses along with expectations of significant fixed asset investment from public funding related to the U.S. Infrastructure, Inflation Reduction Act, and Department of Energy programs, are expected to position the domestic steel industry competitively. Management believes this will help all of its operational platforms, particularly the steel and steel fabrication business.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -6.11% due to these changes.
VGM Scores
Currently, Steel Dynamics has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Steel Dynamics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.