Steel Dynamics, Inc. STLD has issued earnings guidance for second-quarter 2020.
The steel producer expects earnings per share (EPS) to be 29-33 cents for the second quarter. Excluding the impact of additional financing costs and start-up costs, the company anticipates adjusted EPS between 40 cents and 44 cents. Notably, the company reported earnings of 88 cents in the first quarter of 2020 and 87 cents in the year-ago quarter.
On a sequential-comparison basis, the company expects its steel operations’ earnings to be considerably lower in the second quarter due to lower shipments and selling values stemming from the temporary closures due to the coronavirus pandemic. Notably, the domestic automotive producers and associated supply chain have resumed production. Per the company, steel demand related to construction was steadier throughout the second quarter compared with industrial manufacturing.
The company anticipates operating losses for the metals recycling operations in the second quarter as the slowdown in domestic manufacturing and the shelter-in-place restrictions impacted scrap supply and collection. Additionally, lower domestic steel production led to weak scrap demand.
Steel Dynamics expects steel and recycled scrap volumes to improve as the states begin to reopen and steel consuming businesses resume operations. The company also believes that trade protections will provide additional support to the domestic steel mill utilization.
In the steel fabrication platform, customer order backlogs remain strong and customers are positive about non-residential construction projects. At present, the company has not witnessed widespread project delays or cancellations. It expects second-quarter earnings from the segment to be at par with first-quarter results.
Steel Dynamics’ shares have lost 6.8% in the past year compared with the industry’s 28.4% decline.
Zacks Rank & Key Picks
Steel Dynamics currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Barrick Gold Corporation GOLD, B2Gold Corp BTG and Franco-Nevada Corporation FNV, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Barrick has an expected earnings growth rate of 54.9% for 2020. The company’s shares have surged 50.8% in the past year.
B2Gold has an expected earnings growth rate of 214.3% for 2020. Its shares have returned 69.7% in the past year.
Franco-Nevada has an expected earnings growth rate of 19.2% for 2020. The company’s shares have surged 52.3% in the past year.
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