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Steel Dynamics (STLD) Soars 4.9%: Is Further Upside Left in the Stock?

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Steel Dynamics (STLD - Free Report) shares soared 4.9% in the last trading session to close at $126.55. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 9.9% loss over the past four weeks.

STLD’s gain appears to reflect a recovery in its shares from early losses after the company issued a profit warning for the second quarter. It sees second-quarter earnings in the range of $2.64 to $2.68 per share. The company anticipates a notable decline in profitability from its steel operations sequentially, primarily due to lower realized pricing despite steady shipment levels. However, its shares are likely to have been driven by the positive outlook for the steel fabrication and metals recycling segments. The company expects earnings for its metals recycling operations to surpass first quarter results, driven by stronger volumes in both ferrous and nonferrous materials. Steel fabrication operations are projected to achieve earnings in line with the first quarter, with increased shipments offsetting lower realized pricing. Per STLD, domestic steel demand remains stable and continues to be led by the automotive, non-residential construction, energy and industrial sectors. The non-residential construction sector remains robust, reflected by a strong backlog of steel joist and deck orders extending into the fourth quarter of 2024.

This steel producer and metals recycler is expected to post quarterly earnings of $2.97 per share in its upcoming report, which represents a year-over-year change of -38.3%. Revenues are expected to be $4.52 billion, down 11% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Steel Dynamics, the consensus EPS estimate for the quarter has been revised 10.9% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on STLD going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Steel Dynamics is part of the Zacks Steel - Producers industry. Ternium S.A. (TX - Free Report) , another stock in the same industry, closed the last trading session 1% lower at $37.50. TX has returned -13.2% in the past month.

Ternium's consensus EPS estimate for the upcoming report has changed +1.7% over the past month to $1.54. Compared to the company's year-ago EPS, this represents a change of -51.7%. Ternium currently boasts a Zacks Rank of #3 (Hold).

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