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Why Is Steel Dynamics (STLD) Up 4.7% 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 4.7% 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 catalysts.
Steel Dynamics' Q4 Earnings Lag Estimates, Sales Beat
Steel Dynamics logged fourth-quarter 2023 earnings of $2.61 per share, down from $3.61 in the year-ago quarter. It lagged the Zacks Consensus Estimate of $2.63.
Net sales in the fourth quarter were down around 12.3% year over year to roughly $4.23 billion. It, however, surpassed the Zacks Consensus Estimate of $4.11 billion.
Segment Highlights
Net sales for steel operations were $2.91 billion in the reported quarter, down around 0.8% year over year. The company registered steel shipments of roughly 3.06 million tons in the quarter, modestly up from 2.99 million tons a year ago. This compares to our estimate of 3.2 million tons.
The company’s steel operations reported an average external product selling price of $1,090 per ton, down from $1,124 per ton in the year-ago quarter. It surpassed our estimate of $1,001 per ton.
The company's steel operations' operating income in the fourth quarter of 2023 was $365 million, a 24% sequential decline due to seasonally lower long product steel shipments and flat rolled steel metal spread compression, as average realized flat rolled steel selling values fell more than scrap costs.
Net sales of Metal’s recycling operations were $488 million in the quarter under review, reflecting an increase of around 5.3% from the year-ago quarter. Steel Dynamics registered ferrous shipments of around 1.36 million gross tons in the quarter, stable year over year. The figure was below our estimate of 1.38 million gross tons.
The company's steel fabrication operations raked in sales of around $520.6 million, down 52.2% year over year. Steel Dynamics registered steel fabrication shipments of 150,002 tons in the quarter, down from 208,956 tons a year ago. The figure fell short of our estimate of 150,830 tons.
Financial Position
Steel Dynamics ended the quarter with cash and cash equivalents of around $1.4 billion, down around 14% year over year. Long-term debt was roughly $2.61 billion, declining 13.3%.
The company repurchased $1.5 billion of its common stock in 2023, accounting for 8% of its outstanding shares.
Outlook
Steel Dynamics noted that it remains in a strong position. The company is ramping up operations at its new state-of-the-art electric arc furnace flat-rolled steel mill in Texas. It has recently completed the construction of four additional value-added flat rolled steel coating lines, consisting of two paint lines and two galvanizing lines with Galvalume coating capability. These lines will enhance annual value-added flat rolled steel capacity by 1.1 million tons. The company intends to commission these lines in the first quarter of 2024. Moreover, the current market dynamics support higher demand across its operating platforms in 2024, Steel Dynamics noted.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 17.17% due to these changes.
VGM Scores
At this time, Steel Dynamics has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Steel Dynamics has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Steel Dynamics (STLD) Up 4.7% 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 4.7% 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 catalysts.
Steel Dynamics' Q4 Earnings Lag Estimates, Sales Beat
Steel Dynamics logged fourth-quarter 2023 earnings of $2.61 per share, down from $3.61 in the year-ago quarter. It lagged the Zacks Consensus Estimate of $2.63.
Net sales in the fourth quarter were down around 12.3% year over year to roughly $4.23 billion. It, however, surpassed the Zacks Consensus Estimate of $4.11 billion.
Segment Highlights
Net sales for steel operations were $2.91 billion in the reported quarter, down around 0.8% year over year. The company registered steel shipments of roughly 3.06 million tons in the quarter, modestly up from 2.99 million tons a year ago. This compares to our estimate of 3.2 million tons.
The company’s steel operations reported an average external product selling price of $1,090 per ton, down from $1,124 per ton in the year-ago quarter. It surpassed our estimate of $1,001 per ton.
The company's steel operations' operating income in the fourth quarter of 2023 was $365 million, a 24% sequential decline due to seasonally lower long product steel shipments and flat rolled steel metal spread compression, as average realized flat rolled steel selling values fell more than scrap costs.
Net sales of Metal’s recycling operations were $488 million in the quarter under review, reflecting an increase of around 5.3% from the year-ago quarter. Steel Dynamics registered ferrous shipments of around 1.36 million gross tons in the quarter, stable year over year. The figure was below our estimate of 1.38 million gross tons.
The company's steel fabrication operations raked in sales of around $520.6 million, down 52.2% year over year. Steel Dynamics registered steel fabrication shipments of 150,002 tons in the quarter, down from 208,956 tons a year ago. The figure fell short of our estimate of 150,830 tons.
Financial Position
Steel Dynamics ended the quarter with cash and cash equivalents of around $1.4 billion, down around 14% year over year. Long-term debt was roughly $2.61 billion, declining 13.3%.
The company repurchased $1.5 billion of its common stock in 2023, accounting for 8% of its outstanding shares.
Outlook
Steel Dynamics noted that it remains in a strong position. The company is ramping up operations at its new state-of-the-art electric arc furnace flat-rolled steel mill in Texas. It has recently completed the construction of four additional value-added flat rolled steel coating lines, consisting of two paint lines and two galvanizing lines with Galvalume coating capability. These lines will enhance annual value-added flat rolled steel capacity by 1.1 million tons. The company intends to commission these lines in the first quarter of 2024. Moreover, the current market dynamics support higher demand across its operating platforms in 2024, Steel Dynamics noted.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 17.17% due to these changes.
VGM Scores
At this time, Steel Dynamics has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Steel Dynamics has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.