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Steel Dynamics (STLD) to Post Q1 Earnings: What's in the Cards?

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Steel Dynamics, Inc. (STLD - Free Report) is set to release first-quarter 2024 results after the closing bell on Apr 23.

Steel Dynamics’ earnings missed the Zacks Consensus Estimate in three of the last four quarters while beat once. It has a trailing four-quarter earnings surprise of roughly 0.9%, on average. The company posted a negative earnings surprise of around 0.8% in the last reported quarter. Its first-quarter results are likely to have been aided by higher profitability in steel operations.

Shares of STLD have gained 30.8% in the past year compared with 10.3% rise of the industry.


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Let’s see how things are shaping up for this announcement.


What do the Estimates Say?

Steel Dynamics envisions first-quarter earnings in the range of $3.51-$3.55 per share.

The Zacks Consensus Estimate for revenues for Steel Dynamics for the to-be-reported quarter is pinned at $4,736.7 million, suggesting a year-over-year decline of 3.2%.

A Few Factors to Watch

Increased profitability in the company’s steel operations is expected to have supported its first-quarter results. It is likely to have benefited from strong demand in major end markets. Strong demand is expected to have driven its shipment volumes in the March quarter.

Our estimate for total steel shipments is pegged at roughly 3.45 million tons for the first quarter, indicating a 12.7% rise on a sequential comparison basis. The same for external steel shipments stands at roughly 2.7 million tons, suggesting a 1.1% sequential increase.

Steel Dynamics, last month, said that it sees a substantial boost in profitability in its steel operations in the first quarter, particularly driven by increased shipments and earnings across the operations. The upside is expected to have been driven by enhanced performance in its flat-rolled steel operations, with improvements at the Sinton Texas Flat Roll Division. Key sectors such as automotive, non-residential construction, energy and industrial segments continue to demonstrate strong demand, STLD noted.

Earnings from the company’s metals recycling operations are projected to surpass the previous quarter’s levels, driven by improved pricing for ferrous and nonferrous materials along with increased volumes. While STLD sees historically robust earnings in the steel fabrication operations, it is projected to be lower than the sequential fourth-quarter results primarily due to seasonally lower shipments, a contraction in metal spread due to reduced realized pricing and increased steel input costs.

Meanwhile, U.S. steel prices rebounded in late 2023 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 recent pullback in HRC prices partly due to easing mill lead times, sequentially higher average realized selling prices are likely to have supported STLD’s margins in the quarter to be reported.


Steel Dynamics, Inc. Price and EPS Surprise


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 -0.19%. The Zacks Consensus Estimate for earnings for the first quarter is currently pegged at $3.54. 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 #3.

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:

Agnico Eagle Mines Limited (AEM - Free Report) , scheduled to release earnings on Apr 25, has an Earnings ESP of +5.02% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for AEM’s earnings for the first quarter is currently pegged at 55 cents per share.

Dow Inc. (DOW - Free Report) , slated to release earnings on Apr 25, has an Earnings ESP of +2.28% and carries a Zacks Rank #3 at present.

The consensus mark for DOW’s first-quarter earnings is currently pegged at 47 cents.

Nucor Corporation (NUE - Free Report) , scheduled to release first-quarter earnings on Apr 22, has an Earnings ESP of +0.64%.

The Zacks Consensus Estimate for NUE's earnings for the first quarter is currently pegged at $3.62. NUE currently carries a Zacks Rank #3.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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