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Any Weakness In Steel Dynamics Should Be Seen As A Buying Opportunity


Steel Dynamics, Inc. (STLD) slipped during post-market hours, after the company guided Q3 earnings per share below Street view. But, we believe that any weakness in the stock should be taken advantage of, as the stock has at least 10% upside potential in the near-term and well-positioned to at least double in the long-term.

Key Takeaways from the PR

The company expects third-quarter earnings of 63 to 67 cents per share, below the consensus estimate of 70 cents. However, the view exceeds the 58 cents earned in the second quarter and the 25 cents profit in the same period last year. The sequential EPS increase is attributed to meaningful metal spread expansion.

Average steel product prices realized during the quarter were better than the high costs paid for ferrous scrap utilized during the quarter, the company noted. However, lower steel shipments across the platform are expected to dampen some of the positive margin impact.

The steel producer cited its flat roll operations for driving the anticipated earnings improvement, adding that demand from the heavy equipment, agricultural and energy sectors stay challenged, while the automotive sector remains strong and the construction market continues a gradual recovery.

STLD also declared a quarterly cash dividend of 14 cents per share.

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