Steel Dynamics (STLD) Gives Q1 Earnings View, Sees Strong Demand
Steel Dynamics, Inc. STLD issued first-quarter 2021 earnings guidance of $1.88-$1.92 per share. The company projects first-quarter adjusted earnings of $1.94-$1.98 per share, excluding the impacts of costs linked with the construction of the company’s Sinton Texas Flat Roll Steel Mill growth investment of $18 million, or 6 cents per share. Steel Dynamics expects the projected adjusted earnings could set a record earnings quarter for the company.
The guidance suggests a sequential rise from earnings of 89 cents per share and adjusted earnings of 97 cents a share recorded in fourth-quarter 2020. Also, earnings were 88 cents per share in the prior-year quarter.
The profitability of the company’s steel operations for the first quarter is forecast to rise considerably on a sequential basis led by flat roll metal spread expansion, as prices of flat roll steel remain supported by strong demand. The average realized quarterly flat roll steel product pricing is anticipated to increase significantly, more than offsetting higher scrap costs. Steel shipments for the quarter are projected to increase sequentially across the company’s portfolio. Also, the domestic steel demand remains strong led by momentum across the automotive and construction sectors.
The order entries also remain solid as strong demand along with low flat roll steel inventories underpins higher steel selling values. The company expects the momentum to lead to stronger second-quarter results.
The demand for ferrous scrap was also strong in the first quarter, as domestic steel production continued its momentum. Earnings from Steel Dynamics’ metals recycling operations are also projected to be sequentially higher led by increased volume and improved metal margins, as average quarterly raw material prices spiked.
The company also expects earnings from steel fabrication operations to decline sequentially in the first quarter, factoring in higher steel input costs. Steel fabrication shipments are expected to reach record levels in the first quarter due to strong order activity and customers being optimistic about non-residential construction projects. Steel joist and deck product pricing have also risen due to strong demand and higher steel costs.
Shares of Steel Dynamics have gained 159.2% in the past year compared with a 185.9% rise of the industry.
Zacks Rank & Other Key Picks
Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the basic materials space are Fortescue Metals Group Limited FSUGY, Ashland Global Holdings Inc. ASH and Impala Platinum Holdings Limited IMPUY.
Fortescue has a projected earnings growth rate of 107.8% for the current fiscal year. The company’s shares have surged 146.9% in a year. It currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ashland has an expected earnings growth rate of 83.9% for the current fiscal year. The company’s shares have gained 96% in the past year. It currently sports a Zacks Rank #1.
Impala has an expected earnings growth rate of 197.6% for the current fiscal year. The company’s shares have rallied 480.5% in the past year. It currently flaunts a Zacks Rank #1.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
Impala Platinum Holdings Ltd. (IMPUY) : Free Stock Analysis Report
Fortescue Metals Group Ltd. (FSUGY) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
