Steel Dynamics 1Q Profit Outlook Tops Estimates

Steel Dynamics closed 2.4% higher on Wednesday after the steel producer provided earnings guidance for the first quarter of 2021 that came in ahead of the Street’s estimates.

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Steel Dynamics (STLD) projects 1Q adjusted earnings in the range of $1.94 – $1.98 per share, compared to consensus estimates of $1.93 per share. The company said that 1Q “could represent a record earnings quarter.” Steel Dynamics is expected to release its 1Q results in April.

Sequentially, the 1Q profit is expected to be significantly higher than 4Q adjusted earnings of $0.97 per share, reflecting higher demand and an increase in average realized prices. (See Steel Dynamics stock analysis on TipRanks)

The company expects average flat roll steel product pricing to increase considerably during 1Q, offsetting the higher scrap costs. Moreover, it expects strong demand for domestic steel and sees steel shipments increasing sequentially. The company believes “this momentum will continue, resulting in even stronger second quarter 2021 results.”

On Feb. 3, Credit Suisse analyst Curt Woodworth upgraded STLD to Buy from Hold and lifted the price target to $52 (8.4% upside potential) from $32.

In a note to investors, Woodworth said that he believes the company is the most capital efficient steel producer in the U.S. and has an appealing long-term growth story.

Overall, the Street has a Moderate Buy consensus rating on the stock based on 3 Buys and 2 Holds. The average analyst price target of $48.40 implies that the shares are almost fully priced at current levels. Shares gained over 178% in one year.

On TipRanks’ Smart Score ranking, Steel Dynamics gets 9 out of 10, suggesting that the stock is likely to outperform market expectations.