Steel Dynamics Delivers Solid Q3 Results; Shares Rise After Hours

Steel Dynamics, Inc. (STLD) delivered solid third-quarter results driven by strong domestic steel demand from the automotive, construction, and industrial sectors, as well as the energy sector showing signs of recovery. Following the news, shares rose 1.4% in the extended trading session on October 18.

Steel Dynamics is one of the largest American domestic steel producers and metals recyclers. With a market cap of $12.74 billion, shares have gained 88.5% over the past year. (See Insiders’ Hot Stocks on TipRanks)

The company reported adjusted earnings of $4.96 per share, much higher than analyst estimates of $4.57 per share. In Q3FY20, STLD posted adjusted earnings of $0.51 per share.

Moreover, net sales came in at $5.1 billion, up a whopping 118.9% year-over-year, and also surpassed Street estimates of $4.98 billion.

Commenting on the quarterly performance, Mark D. Millett, Chairman, and CEO of Steel Dynamics said, “During the third quarter, steel demand remained strong as product pricing continued its positive trajectory across our entire steel platform. Higher realized steel selling values drove significant metal spread expansion and were again most prominent within our flat roll steel operations, as continued demand strength and low customer inventories persisted throughout the supply chain and supported prices.”

Based on the current market, STLD expects steel demand momentum to continue into the fourth quarter and through 2022. As a result, the company believes that strong steel demand along with low customer inventories will help maintain elevated steel selling values in the future.

Yesterday, Morgan Stanley analyst Carlos De Alba downgraded the stock to a Hold rating from a Buy with a price target of $61, implying 2.3% downside potential to current levels.

Overall, the stock commands a Strong Buy consensus rating based on 4 Buys and 1 Hold. The average Steel Dynamics price target of $82 implies 31.4% upside potential to current levels.

Furthermore, according to TipRanks’ Smart Score system, Steel Dynamics gets a 7 out of 10, which indicates that the stock is likely to perform in line with market averages.