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Steel Dynamics (STLD) Provides Earnings Guidance for Q1

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Steel Dynamics, Inc. STLD provided earnings guidance for first-quarter 2018. The company expects earnings to be between 88 cents and 92 cents per share for the quarter. Barring one-time items, adjusted earnings are expected to be higher than 54 cents per share in the previous quarter and 82 cents a year ago.

For the first quarter, Steel Dynamics anticipates profitability from its steel operations to improve sequentially backed by higher shipments and metal spread expansion. Also, pricing of average quarterly steel products is expected to increase more than scrap costs. This is because prices of steel across the platform have been improving throughout the quarter aided by strong steel demand in domestic market.

Moreover, Steel Dynamics expects this improving steel consumption and pricing momentum to continue during the year supported by strong steel demand fundamentals and customer optimism. The company also believes the recent steel trade actions taken by the U.S. Federal Administration are likely to reduce imports.

Steel Dynamics anticipates profitability of its metals recycling platform to improve sequentially on the back of higher shipments as the demand for recycled ferrous material from the domestic steel sector increased during the quarter.

However, earnings of its steel fabrication business are expected to decline sequentially due to seasonally lower shipments. Notably, the seasonally adjusted fabrication order backlog of the company is strong and the demand for the non-residential construction sector remains solid.

Shares of Steel Dynamics have gained 8.4% in the past three months, outperforming the industry’s 5.5% growth.

Zacks Rank & Key Picks

Steel Dynamics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are LyondellBasell Industries N.V. LYB, CF Industries Holdings, Inc. CF and Daqo New Energy Corp. DQ, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LyondellBasell has an expected long-term earnings growth rate of 9%. Its shares have moved up 11.6% over the last six months.

CF Industries has an expected long-term earnings growth rate of 8%. Its shares have gained 8.9% over the last six months.

Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have rallied 68.2% over the past six months.

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