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Steel Dynamics (STLD)
NASDAQ:STLD
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Steel Dynamics
(NASDAQ:STLD)75Outperform
Positive Factors
Growth Projects
Steel Dynamics has a solid pipeline of growth projects that will drive through-cycle earnings higher over time.
Negative Factors
Operational Challenges
Earnings are expected to remain subdued, driven by lackluster lagged pricing and elevated costs at Sinton.
Valuation Concerns
Valuation looks full at 9x 2025E EV/EBITDA vs a historical ~7x including benefit from its new aluminum rolling mill, which could disappoint near term.
Steel Dynamics (STLD) vs. S&P 500 (SPY)
Market Cap
$20.56B
Dividend Yield1.41%
Average Volume (3M)1.77M
Price to Earnings (P/E)13.7
Beta (1Y)1.16
Revenue Growth-6.68%
EPS Growth-32.96%
CountryUS
Employees12,600
SectorBasic Materials
Sector Strength56
IndustrySteel
Share Statistics
EPS (TTM)9.79
Shares Outstanding150,163,990
10 Day Avg. Volume1,511,838
30 Day Avg. Volume1,770,528
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.15
Price to Cash Flow (P/CF)6.80
P/FCF Ratio37.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$146.38Price Target Upside15.83% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Steel Dynamics Business Overview & Revenue Model
Company DescriptionSteel Dynamics, Inc. (STLD) is one of the largest domestic steel producers and metal recyclers in the United States. The company operates through three primary segments: steel operations, metals recycling operations, and steel fabrication. The steel operations segment produces a wide range of steel products, including flat-rolled steel, structural steel, and specialized engineered steel products, serving various industries such as construction, automotive, and manufacturing. The metals recycling segment processes ferrous and nonferrous scrap metal, which is used as raw material for steel production. The steel fabrication segment produces steel joists, girders, and decking products for the non-residential construction industry.
How the Company Makes MoneySteel Dynamics generates revenue primarily through the manufacturing and sale of steel products. The company's steel operations segment is its largest source of income, producing and selling numerous types of steel products to diverse markets, including construction, automotive, and manufacturing industries. The metals recycling segment contributes to revenue by acquiring and processing scrap metal, which is sold to steel mills, including those owned by Steel Dynamics, thus supporting a vertically integrated model. Additionally, the steel fabrication segment adds revenue through the production and sale of fabricated steel products used in construction. Strategic partnerships and acquisitions, along with a focus on operational efficiency and cost control, further enhance the company's profitability.
Steel Dynamics Financial Statement Overview
Summary
Steel Dynamics demonstrates robust profitability and a strong balance sheet, with commendable equity and moderate leverage. However, revenue contraction and negative free cash flow highlight potential risks. The company must address these cash flow challenges to sustain its financial health.Income Statement
Steel Dynamics exhibits strong profitability with a TTM gross profit margin of 15.88% and a net profit margin of 8.76%. However, a decline in revenue from $18.80 billion in 2023 to $17.54 billion in the TTM period indicates a revenue contraction of -6.58%, impacting overall performance. Despite this, the company's EBIT margin remains healthy at 11.08%, showcasing operational efficiency.75
Positive
Balance Sheet
The company maintains a solid balance sheet with a debt-to-equity ratio of 0.36, indicating moderate leverage. The return on equity stands at 17.20%, reflecting effective use of shareholders' funds. Additionally, the equity ratio of 59.82% signifies a strong equity position, contributing to financial stability.80
Positive
Cash Flow
Steel Dynamics experiences challenges in cash flow with a free cash flow growth rate of -101.26%, due to reduced cash flow from operations and significant capital expenditures. The operating cash flow to net income ratio of 1.20 suggests adequate cash generation relative to net income, but the negative free cash flow poses a concern.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 17.54B | 18.80B | 22.26B | 18.41B | 9.60B | Gross Profit |
| 2.80B | 4.05B | 6.12B | 5.36B | 1.43B | EBIT |
| 1.94B | 3.15B | 5.09B | 4.30B | 847.14M | EBITDA |
| 2.52B | 3.73B | 5.50B | 4.61B | 1.19B | Net Income Common Stockholders |
| 1.54B | 2.45B | 3.86B | 3.21B | 550.82M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 737.27M | 2.12B | 2.26B | 1.24B | 1.37B | Total Assets |
| 14.94B | 14.91B | 14.16B | 12.53B | 9.27B | Total Debt |
| 3.23B | 3.20B | 3.07B | 3.11B | 3.10B | Net Debt |
| 2.64B | 1.80B | 1.44B | 1.86B | 1.73B | Total Liabilities |
| 5.99B | 6.07B | 6.06B | 6.21B | 4.92B | Stockholders Equity |
| 8.93B | 8.87B | 8.13B | 6.30B | 4.35B |
| Cash Flow | Free Cash Flow | |||
| -23.50M | 1.86B | 3.55B | 1.20B | -211.02M | Operating Cash Flow |
| 1.84B | 3.52B | 4.46B | 2.20B | 987.03M | Investing Cash Flow |
| -1.30B | -1.97B | -1.88B | -999.42M | -993.26M | Financing Cash Flow |
| -1.35B | -1.78B | -2.20B | -1.33B | -7.05M |
Steel Dynamics Technical Analysis
Negative
126.37
Price Trends
125.22
Positive
130.55
Negative
126.79
Negative
Market Momentum
1.15
Positive
42.45
Neutral
25.76
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STLD, the sentiment is Negative. The current price of 126.37 is below the 20-day moving average (MA) of 132.36, above the 50-day MA of 125.22, and below the 200-day MA of 126.79, indicating a neutral trend. The MACD of 1.15 indicates Positive momentum. The RSI at 42.45 is Neutral, neither overbought nor oversold. The STOCH value of 25.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STLD.
Steel Dynamics Risk Analysis
Steel Dynamics disclosed 17 risk factors in its most recent earnings report. Steel Dynamics reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Steel Dynamics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $20.56B | 13.72 | 17.20% | 1.41% | -6.68% | -32.96% | |
74 Outperform | $15.74B | 18.93 | 12.12% | 1.52% | -6.56% | -31.89% | |
73 Outperform | $29.86B | 15.31 | 9.99% | 1.62% | -11.46% | -53.29% | |
60 Neutral | $5.50B | 43.64 | 3.32% | 1.49% | -8.66% | -82.83% | |
57 Neutral | $8.49B | 24.12 | 3.38% | 0.51% | -13.48% | -56.94% | |
47 Neutral | $2.64B | -4.00 | -31.55% | 3.33% | 2.93% | -29.90% | |
44 Neutral | $4.99B | ― | -11.31% | ― | -12.78% | -301.57% |
* Basic Materials Sector Average
Performance Comparison
STLD
Steel Dynamics
126.37
-0.27
-0.21%
CLF
Cleveland-Cliffs
9.47
-10.81
-53.30%
CMC
Commercial Metals Company
45.22
-7.16
-13.67%
NUE
Nucor
129.51
-52.61
-28.89%
RS
Reliance Steel
281.23
-34.44
-10.91%
X
United States Steel
37.70
-9.82
-20.66%
Steel Dynamics Earnings Call Summary
Earnings Call Date: Jan 22, 2025 | % Change Since: 2.84% | Next Earnings Date: Apr 16, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a strong operational year for Steel Dynamics, highlighted by safety achievements and significant progress in aluminum operations. However, challenges such as decreased steel pricing, increased imports, and operational outages impacted financials, balancing the overall sentiment.Highlights
Record Safety Achievements
Steel Dynamics celebrated its safest year ever with 60% of locations having zero recordable injuries and 81% having zero lost time incidents.
High Operating Performance
Achieved operating income of $1.9 billion and net income of $1.5 billion for the year, with a 23% after-tax return on invested capital over three years.
Strong Liquidity Position
Liquidity remained strong at $2.2 billion, with cash and investments of approximately $1 billion.
Aluminum Dynamics Progress
First aluminum ingot cast at the Columbus facility, with expectations for commercial shipments by June 2025.
Sinton Plant Improvement
Sinton plant ran at over 80% capacity, improving to nearly 90% utilization, contributing to expectations of profitability soon.
Lowlights
Lower Q4 2024 Financials
Fourth quarter net income of $207 million, or $1.36 per diluted share, was lower than the previous quarter due to decreased steel pricing and seasonal volume declines.
Steel Operations Challenges
Operating income from steel operations decreased to $165 million in the fourth quarter due to a $48 per ton decline in average pricing.
Unplanned Outages
An unplanned outage at the Butler Flat Roll division impacted shipments by 50,000 tons.
Increased Imports and Trade Issues
Increased imports have affected certain product areas, specifically coated flat-rolled steel products, leading to a trade case filing.
Company Guidance
During the Steel Dynamics Q4 2024 earnings call, the company provided comprehensive guidance for the upcoming year, 2025. They reported a strong financial performance for 2024 despite market challenges, with steel shipments reaching the second-highest annual figure at 12.7 million tons. The company generated $1.8 billion in cash from operations and achieved an adjusted EBITDA of $2.5 billion. Steel Dynamics is ramping up four new value-added flat-rolled steel coating lines, expected to contribute 1.1 million tons of higher-margin products in 2025. The Sinton facility showed considerable progress, operating above 80% capacity, with profitability anticipated in the coming months. Additionally, their Aluminum Dynamics division cast its first aluminum ingot, with commercial shipments expected by June 2025. The company highlighted a record year in safety, with 60% of locations reporting zero recordable injuries and 81% reporting zero lost-time incidents. Looking forward, they anticipate positive impacts from infrastructure investments and reduced imports, projecting higher steel demand and prices in 2025.Steel Dynamics Corporate Events
Business Operations and StrategyFinancial Disclosures
Steel Dynamics Projects Lower Q4 2024 Earnings
Negative
Dec 17, 2024
Steel Dynamics has issued its fourth quarter 2024 earnings guidance, projecting earnings of $1.26 to $1.30 per diluted share, a decrease from the previous quarter and the same quarter last year. This downturn is attributed to lower average realized pricing, seasonal shipment reductions, and a significant unplanned outage at the Butler Flat Roll Division. Despite these challenges, the company anticipates higher earnings from its metals recycling operations and reports a stable order backlog in steel fabrication, with expectations for improved demand in 2025 supported by declining interest rates and U.S. infrastructure investments.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.