Back to top

Image: Bigstock

Steel Dynamics (STLD) Sees Q2 Earnings to Fall on Lower Pricing

Read MoreHide Full Article

Steel Dynamics, Inc. (STLD - Free Report) announced its earnings guidance for second-quarter 2024, projecting it in the range of $2.64-$2.68 per share. The figure suggests a decline from first-quarter 2024 levels. In the last reported quarter, earnings came in at $3.67. The projected figure also calls for a plunge from $4.81 reported in the second quarter of the previous year.

The company anticipates a notable decline in profitability from its steel operations in second-quarter 2024 compared with the first quarter’s tally, primarily due to lower realized pricing despite steady shipment levels. Domestic steel demand remains stable, but buying hesitancy persists due to a weakening scrap price environment. Demand continues to be driven by the automotive, non-residential construction, energy and industrial sectors.

Earnings from the company’s metals recycling operations are expected to surpass first-quarter results, driven by stronger volumes in ferrous and non-ferrous materials.

Steel fabrication operations’ earnings are likely to be in line with first-quarter numbers, with increased shipments balancing lower realized pricing. The non-residential construction sector remains robust, highlighted by a strong backlog of steel joist and deck orders extending into fourth-quarter 2024, with historically high product pricing. The ongoing onshoring of manufacturing, combined with a strong U.S. infrastructure program and industrial expansions, is expected to sustain high demand in the coming years.

Reflecting continued confidence in its earnings outlook and cash flow generation, STLD repurchased $247 million, or 1.1%, of its common stock during the second quarter through Jun 10, 2024.

In the past year, the stock has gained 23.4% compared with the industry’s 2.1% fall in the same period.

Zacks Investment Research
Image Source: Zacks Investment Research

In first-quarter 2024, Steel Dynamics reported earnings of $3.67 per share, slightly down from $3.70 in the same quarter last year but exceeding the Zacks Consensus Estimate of $3.54. Net sales decreased by 4% year over year to $4,694 million, missing the Zacks Consensus Estimate of $4,739.7 million.

Despite some early volatility in steel orders, demand remained steady in the first quarter, leading to near-record shipments and higher selling prices in steel operations, with net sales up 9% to $3,366.2 million with shipments of nearly 3.3 million tons. The average external product selling price for steel rose to $1,201 per ton. However, metal recycling net sales fell 2% to $569.5 million. Steel fabrication sales dropped 48% to $447.2 million, with shipments declining 17% to 143,842 tons.

Zacks Rank & Key Picks

Steel Dynamics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation (CRS - Free Report) , ATI Inc. (ATI - Free Report) and Ecolab Inc. (ECL - Free Report) . While Carpenter Technology sports a Zacks Rank #1 (Strong Buy) at present, ATI and Ecolab carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CRS’s current-year earnings is pegged at $4.31, indicating a year-over-year rise of 278%. CRS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 15.1%. The company’s shares have soared 95.3% in the past year.

ATI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 8.34%, on average. The stock has jumped 39.7% in the past year.

The Zacks Consensus Estimate for Ecolab's current-year earnings is pegged at $6.59, indicating a rise of 26.5% from the year-ago levels. ECL beat the consensus estimate in each of the last four quarters, the average earnings surprise being 1.3. The stock has rallied nearly 33.6% in the past year.

Published in