There's been a notable change in appetite for Steel Dynamics, Inc. (NASDAQ:STLD) shares in the week since its quarterly report, with the stock down 12% to US$22.25. The result was positive overall - although revenues of US$2.6b were in line with what the analysts predicted, Steel Dynamics surprised by delivering a statutory profit of US$0.88 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Steel Dynamics after the latest results.
Taking into account the latest results, the current consensus, from the eight analysts covering Steel Dynamics, is for revenues of US$8.88b in 2020, which would reflect an uncomfortable 13% reduction in Steel Dynamics' sales over the past 12 months. Statutory earnings per share are expected to plummet 44% to US$1.68 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$8.81b and earnings per share (EPS) of US$1.69 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$27.16. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Steel Dynamics at US$35.00 per share, while the most bearish prices it at US$22.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 13% revenue decline a notable change from historical growth of 8.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.9% next year. It's pretty clear that Steel Dynamics' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$27.16, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Steel Dynamics going out to 2022, and you can see them free on our platform here..
You still need to take note of risks, for example - Steel Dynamics has 3 warning signs we think you should be aware of.
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