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Steel Dynamics’ earnings beat the Zacks Consensus Estimate in two of the last four quarters while missed twice. It has a trailing four-quarter earnings surprise of roughly 6.5%, on average. The company posted a negative earnings surprise of 0.6% in the last reported quarter. Its fourth-quarter results are likely to have been hurt by weaker profitability in steel operations and lower selling prices.
Shares of the company have gained 4.7% in the past year compared with 10.7% rise 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 fourth-quarter earnings in the range of $2.60-$2.64 per share, which indicates a decline on both sequential and year-over-year basis.
The Zacks Consensus Estimate for revenues for Steel Dynamics for the to-be-reported quarter is at $4,112.4 million, suggesting a year-over-year decline of 14.8%.
A Few Factors to Watch
Lower profitability in the company’s steel operations might have affected its fourth-quarter results. Steel Dynamics, last month, said that it expects fourth-quarter profits from its steel operations to drop from the third quarter due to a contraction in metal spreads. Lower realized flat rolled steel prices more than offset the benefits of lower scrap costs. The company, however, noted that steel order activity remained robust in the quarter, indicated by extended order lead times.
For the steel fabrication operations, STLD sees fourth-quarter earnings to be lower than the sequential third-quarter results. This is attributed to decreased shipments and metal spread compression, influenced by declining realized selling values and increased steel input costs during the quarter. Earnings for the company's metals recycling operations are projected to be comparable with the prior quarter, with pricing-related metal spread expansion compensating for lower volumes.
Meanwhile, U.S. steel prices rebounded during the fourth quarter with the benchmark hot-rolled coil (HRC) prices breaking above $1,000 per short ton in December, driven by U.S. steel mills’ price hike actions, supply tightness and a recovery in demand. The recovery is also being supported by the resolution to the United Auto Workers (UAW) strike. Notably, the UAW reached a deal with the Detroit Big Three in November 2023, ending the roughly six-week strike that weighed on the U.S. steel industry due to a slowdown in automotive demand.
Notwithstanding the recovery in HRC prices, lower average realized selling prices are likely to have impacted STLD’s top line and margins in the quarter to be reported.
Our estimate for average external product selling price for the company's steel operations is pegged at $1,001 per ton for the fourth quarter, indicating a 16% decline on a sequential comparison basis and an 11% year-over-year decrease.
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 fourth quarter is currently pegged at $2.63. 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 #1.
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
The consensus estimate for CRS’s earnings for the fiscal second quarter is currently pegged at 85 cents.
Barrick Gold Corporation (GOLD - Free Report) , slated to release earnings on Feb 14, has an Earnings ESP of +18.11% and carries a Zacks Rank #3 at present.
The consensus mark for GOLD’s fourth-quarter earnings is currently pegged at 25 cents.
Kinross Gold Corporation (KGC - Free Report) , scheduled to release fourth-quarter earnings on Feb 14, has an Earnings ESP of +25.00%.
The Zacks Consensus Estimate for Kinross' earnings for the fourth quarter is currently pegged at 9 cents. KGC currently carries a Zacks Rank #3.
Image: Bigstock
Steel Dynamics (STLD) to Post Q4 Earnings: What's in the Cards?
Steel Dynamics, Inc. (STLD - Free Report) is set to release fourth-quarter 2023 results after the closing bell on Jan 23.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in two of the last four quarters while missed twice. It has a trailing four-quarter earnings surprise of roughly 6.5%, on average. The company posted a negative earnings surprise of 0.6% in the last reported quarter. Its fourth-quarter results are likely to have been hurt by weaker profitability in steel operations and lower selling prices.
Shares of the company have gained 4.7% in the past year compared with 10.7% rise 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 fourth-quarter earnings in the range of $2.60-$2.64 per share, which indicates a decline on both sequential and year-over-year basis.
The Zacks Consensus Estimate for revenues for Steel Dynamics for the to-be-reported quarter is at $4,112.4 million, suggesting a year-over-year decline of 14.8%.
A Few Factors to Watch
Lower profitability in the company’s steel operations might have affected its fourth-quarter results. Steel Dynamics, last month, said that it expects fourth-quarter profits from its steel operations to drop from the third quarter due to a contraction in metal spreads. Lower realized flat rolled steel prices more than offset the benefits of lower scrap costs. The company, however, noted that steel order activity remained robust in the quarter, indicated by extended order lead times.
For the steel fabrication operations, STLD sees fourth-quarter earnings to be lower than the sequential third-quarter results. This is attributed to decreased shipments and metal spread compression, influenced by declining realized selling values and increased steel input costs during the quarter. Earnings for the company's metals recycling operations are projected to be comparable with the prior quarter, with pricing-related metal spread expansion compensating for lower volumes.
Meanwhile, U.S. steel prices rebounded during the fourth quarter with the benchmark hot-rolled coil (HRC) prices breaking above $1,000 per short ton in December, driven by U.S. steel mills’ price hike actions, supply tightness and a recovery in demand. The recovery is also being supported by the resolution to the United Auto Workers (UAW) strike. Notably, the UAW reached a deal with the Detroit Big Three in November 2023, ending the roughly six-week strike that weighed on the U.S. steel industry due to a slowdown in automotive demand.
Notwithstanding the recovery in HRC prices, lower average realized selling prices are likely to have impacted STLD’s top line and margins in the quarter to be reported.
Our estimate for average external product selling price for the company's steel operations is pegged at $1,001 per ton for the fourth quarter, indicating a 16% decline on a sequential comparison basis and an 11% year-over-year decrease.
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 fourth quarter is currently pegged at $2.63. 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 #1.
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Carpenter Technology Corporation (CRS - Free Report) , scheduled to release earnings on Jan 25, has an Earnings ESP of +0.89% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for CRS’s earnings for the fiscal second quarter is currently pegged at 85 cents.
Barrick Gold Corporation (GOLD - Free Report) , slated to release earnings on Feb 14, has an Earnings ESP of +18.11% and carries a Zacks Rank #3 at present.
The consensus mark for GOLD’s fourth-quarter earnings is currently pegged at 25 cents.
Kinross Gold Corporation (KGC - Free Report) , scheduled to release fourth-quarter earnings on Feb 14, has an Earnings ESP of +25.00%.
The Zacks Consensus Estimate for Kinross' earnings for the fourth quarter is currently pegged at 9 cents. KGC currently carries a Zacks Rank #3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.