Steel Dynamics (STLD) to Post Q3 Earnings: What's in the Offing?
Steel Dynamics, Inc. STLD is set to release third-quarter 2023 results after the closing bell on Oct 18.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 9.1%, on average. The company posted a negative earnings surprise of 0.2% in the last reported quarter. Its third-quarter results are likely to have been hurt by weaker profitability in steel operations and lower selling prices.
Shares of the company have gained 35.6% in the past year compared with 44.2% rise of the industry.
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Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
Steel Dynamics envisions third-quarter earnings in the range of $3.46-$3.50 per share, which indicates a decline on both sequential and year-over-year basis.
The Zacks Consensus Estimate for revenues for Steel Dynamics for the to-be-reported quarter is pegged at $4,706.6 million, suggesting a year-over-year decline of 16.7%.
A Few Factors to Watch
Lower profitability in the company’s steel operations might have affected its third-quarter results. Steel Dynamics, last month, said that it expects third-quarter profits from its steel operations to drop significantly from the second quarter due to a contraction in metal spreads. Lower realized flat rolled steel prices more than offset the benefits of lower scrap costs. The company also noted that it saw strong order activities and steady steel shipments excluding the lost volume related to an unplanned outage at Sinton in July.
Meanwhile, U.S. steel prices have witnessed a sharp downward correction. The benchmark hot-rolled coil (HRC) prices have retracted from their April 2023 peak of around $1,200 per short ton. Prices have fallen more than 40% from the highs hit in April, currently hovering around $700 per short ton. The downward drift partly reflects shorter lead times. The United Auto Workers strike against General Motors, Ford and Stellantis also weighed on HRC prices of late.
The impacts of weaker steel prices are expected to reflect on the performance of Steel Dynamics in the third quarter. Lower average realized selling prices are likely to have impacted its top line and margins.
The consensus estimate for average external product selling price for the company's steel operations is pegged at $1,144 per ton for the third quarter, indicating a 9% decline on a sequential comparison basis and a 17.2% year-over-year decrease. Our estimate for the quarter is $1,134 per ton.
Steel Dynamics, Inc. Price and EPS Surprise
Steel Dynamics, Inc. price-eps-surprise | Steel Dynamics, Inc. Quote
Zacks Model
Our proven model does not conclusively predict an earnings beat for Steel Dynamics this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for Steel Dynamics is 0.00%. The Zacks Consensus Estimate for earnings for the third quarter is currently pegged at $3.48. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Steel Dynamics currently carries a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Element Solutions Inc ESI, scheduled to release earnings on Oct 25, has an Earnings ESP of +1.94% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for ESI’s earnings for the third quarter is currently pegged at 34 cents.
Barrick Gold Corporation GOLD, slated to release earnings on Nov 2, has an Earnings ESP of +6.87% and carries a Zacks Rank #2 at present.
The consensus mark for GOLD’s third-quarter earnings is currently pegged at 26 cents.
Kinross Gold Corporation KGC, scheduled to release third-quarter earnings on Nov 8, has an Earnings ESP of +8.70%.
The Zacks Consensus Estimate for Kinross' earnings for the third quarter is currently pegged at 9 cents. KGC currently carries a Zacks Rank #2.
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Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
Element Solutions Inc. (ESI) : Free Stock Analysis Report
Kinross Gold Corporation (KGC) : Free Stock Analysis Report
Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
