Earnings Estimates Moving Higher for Steel Dynamics (STLD): Time to Buy?
Steel Dynamics (STLD) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
Analysts' growing optimism on the earnings prospects of this steel producer and metals recycler is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Steel Dynamics, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
For the current quarter, the company is expected to earn $3.45 per share, which is a change of -42.69% from the year-ago reported number.
Over the last 30 days, the Zacks Consensus Estimate for Steel Dynamics has increased 5.83% because one estimate has moved higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $10.85 per share represents a change of -52.16% from the year-ago number.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, one estimate has moved up for Steel Dynamics versus no negative revisions. This has pushed the consensus estimate 12.55% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, Steel Dynamics currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
While strong estimate revisions for Steel Dynamics have attracted decent investments and pushed the stock 21.9% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
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