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Are Investors Undervaluing Steel Dynamics (STLD) Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Steel Dynamics (STLD - Free Report) . STLD is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.60, which compares to its industry's average of 21.23. Over the last 12 months, STLD's Forward P/E has been as high as 13.05 and as low as 6.73, with a median of 9.19.

Finally, investors will want to recognize that STLD has a P/CF ratio of 6.50. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. STLD's current P/CF looks attractive when compared to its industry's average P/CF of 8.71. STLD's P/CF has been as high as 6.74 and as low as 3.64, with a median of 5.07, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Steel Dynamics is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, STLD feels like a great value stock at the moment.


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