Yahoo Finance Steel Dynamics (STLD) Up 2.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Steel Dynamics (STLD). Shares have added about 2.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steel Dynamics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Steel Dynamics’ Q1 Earnings Top on Higher Selling Prices
Steel Dynamics logged first-quarter 2024 earnings of $3.67 per share, down from $3.70 in the year-ago quarter. It topped the Zacks Consensus Estimate of $3.54.
Net sales in the first quarter were down around 4% year over year to $4.69 billion. It missed the Zacks Consensus Estimate of $4.74 billion.
While the company witnessed some steel order volatility early in the reported quarter, underlying steel demand was steady in the quarter. Solid demand led to near-record shipments and higher selling prices in the company’s steel operations.
Segment Highlights
Net sales for steel operations were roughly $3.37 billion in the reported quarter, up around 9% year over year. Steel Dynamics registered steel shipments of roughly 3.3 million tons in the quarter. This compares to our estimate of 3.45 million tons. The company saw strong demand led by automotive, non-residential construction, energy and industrial sectors.
The company’s steel operations reported an average external product selling price of $1,201 per ton, up from $1,076 per ton in the year-ago quarter and $1,090 per ton in the previous quarter. It surpassed our estimate of $1,002 per ton.
Net sales of Metal’s recycling operations were $569.5 million in the quarter under review, down around 2% from the year-ago quarter. The company registered ferrous shipments of around 1.45 million gross tons in the quarter, stable year over year. The figure was below our estimate of 1.56 million gross tons.
The company's steel fabrication operations raked in sales of around $447.2 million, down roughly 48% year over year. Steel Dynamics recorded steel fabrication shipments of 143,842 tons in the quarter, down around 17% year over year. The figure fell short of our estimate of 152,387 tons.
Financial Position
Steel Dynamics ended the quarter with cash and cash equivalents of around $1.04 billion, down around 35% year over year. Long-term debt was roughly $2.61 billion, down roughly 13% from the year-ago quarter.
The company generated cash flow from operations of $355 million in the reported quarter, down around 52% year over year. It maintained strong liquidity of $3.1 billion as of Mar 31, 2024.
The company repurchased $298 million of its common stock in the quarter, accounting for 1.5% of its outstanding shares.
Outlook
Steel Dynamics noted that market conditions are in place for solid domestic steel consumption throughout 2024. Order entry activity remains strong across all of its businesses while steel prices have firmed. The company expects steel consumption to rise in North America this year. Steel prices are expected to be supported by demand for lower-carbon emission, U.S. produced steel products and lower imports. The company also envisions automotive, non-residential construction, industrial and energy sectors to remain solid in 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Steel Dynamics has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Steel Dynamics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
