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Why Steel Dynamics (STLD) Dipped More Than Broader Market Today

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Steel Dynamics (STLD - Free Report) closed the most recent trading day at $131.73, moving -1.9% from the previous trading session. The stock fell short of the S&P 500, which registered a loss of 0.74% for the day. Meanwhile, the Dow lost 1.06%, and the Nasdaq, a tech-heavy index, lost 0.58%.

The steel producer and metals recycler's shares have seen an increase of 3.2% over the last month, not keeping up with the Basic Materials sector's gain of 3.23% and the S&P 500's gain of 4.27%.

The upcoming earnings release of Steel Dynamics will be of great interest to investors. It is anticipated that the company will report an EPS of $3.33, marking a 30.77% fall compared to the same quarter of the previous year. In the meantime, our current consensus estimate forecasts the revenue to be $4.71 billion, indicating a 7.25% decline compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $12.44 per share and revenue of $18.24 billion, which would represent changes of -16.79% and -2.93%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Steel Dynamics. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.23% higher. Steel Dynamics is currently sporting a Zacks Rank of #3 (Hold).

With respect to valuation, Steel Dynamics is currently being traded at a Forward P/E ratio of 10.8. For comparison, its industry has an average Forward P/E of 10.86, which means Steel Dynamics is trading at a discount to the group.

The Steel - Producers industry is part of the Basic Materials sector. This group has a Zacks Industry Rank of 231, putting it in the bottom 9% of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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