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Why Is Steel Dynamics (STLD) Down 8.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Steel Dynamics (STLD - Free Report) . Shares have lost about 8.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Steel Dynamics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Steel Dynamics’ Q2 Earnings and Sales Beat Estimates
Steel Dynamics logged second-quarter 2024 earnings of $2.72 per share, down from $4.81 in the year-ago quarter. The figure beat the Zacks Consensus Estimate of $2.67.
Net sales in the second quarter were down around 8.8% year over year to roughly $4.63 billion. The top line surpassed the Zacks Consensus Estimate of roughly $4.42 billion.
Segment Highlights
Steel Dynamics’ net sales from steel operations totaled roughly $3.13 billion in the reported quarter, down 9.2% year over year. Steel shipments amounted to approximately 3.2 million tons, slightly lower than the previous year's 3.3 million tons and below our estimate of 3.26 million tons. The average external selling price per ton was $1,138, down from $1,251 in the same quarter last year and surpassing our estimate of $1,092 per ton.
Operating income for Steel Dynamics’ steel operations in the second quarter was $442.3 million, plunging 37% year over year. It was also down sequentially due to a steep decline in realized selling prices compared to scrap costs during the quarter.
Net sales for metals recycling operations reached $586.4 million, dropping 1% year over year. Ferrous shipments totaled around 1.51 million gross tons, slightly above our forecast of 1.49 million.
Steel Dynamics' steel fabrication operations reported sales of approximately $472.8 million, down 38% from the previous year’s tally. Shipments amounted to 159,069 tons, which exceeded our estimate of 149,319 tons.
Financial Position
Steel Dynamics ended the quarter with cash and cash equivalents of around $830 million, down nearly 60% year over year. Long-term debt was roughly $2.2 billion, declining 26.5%.
The company repurchased $309 million of its common stock, accounting for 1.5% of its outstanding shares.
Outlook
Steel Dynamics expressed confidence in strong market conditions for domestic steel consumption in the second half of 2024. The company highlighted improved order entries and expected firming steel prices, citing steady performance in the automotive, non-residential construction and industrial sectors. It also noted positive impacts from onshoring manufacturing and public funding initiatives like the U.S. Infrastructure Act, benefiting its steel and fabrication operations.
The company reported a successful ramp-up of four new flat-rolled steel coating lines, which have already produced high-quality galvanized and painted products. It anticipates an additional 1.1 million tons of value-added steel products in the latter half of the year, with full benefits in 2025. This expansion will enhance supply-chain capabilities and increase higher-margin steel product offerings, currently making up around 65% of its steel revenues.
Additionally, the construction of an aluminum flat-rolled products mill is on track, with operations expected to begin in mid-2025. This mill will supply high-recycled content products to the sustainable beverage can and packaging industry as well as the automotive, industrial and construction sectors.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Steel Dynamics has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Steel Dynamics has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Steel Dynamics (STLD) Down 8.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Steel Dynamics (STLD - Free Report) . Shares have lost about 8.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Steel Dynamics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Steel Dynamics’ Q2 Earnings and Sales Beat Estimates
Steel Dynamics logged second-quarter 2024 earnings of $2.72 per share, down from $4.81 in the year-ago quarter. The figure beat the Zacks Consensus Estimate of $2.67.
Net sales in the second quarter were down around 8.8% year over year to roughly $4.63 billion. The top line surpassed the Zacks Consensus Estimate of roughly $4.42 billion.
Segment Highlights
Steel Dynamics’ net sales from steel operations totaled roughly $3.13 billion in the reported quarter, down 9.2% year over year. Steel shipments amounted to approximately 3.2 million tons, slightly lower than the previous year's 3.3 million tons and below our estimate of 3.26 million tons. The average external selling price per ton was $1,138, down from $1,251 in the same quarter last year and surpassing our estimate of $1,092 per ton.
Operating income for Steel Dynamics’ steel operations in the second quarter was $442.3 million, plunging 37% year over year. It was also down sequentially due to a steep decline in realized selling prices compared to scrap costs during the quarter.
Net sales for metals recycling operations reached $586.4 million, dropping 1% year over year. Ferrous shipments totaled around 1.51 million gross tons, slightly above our forecast of 1.49 million.
Steel Dynamics' steel fabrication operations reported sales of approximately $472.8 million, down 38% from the previous year’s tally. Shipments amounted to 159,069 tons, which exceeded our estimate of 149,319 tons.
Financial Position
Steel Dynamics ended the quarter with cash and cash equivalents of around $830 million, down nearly 60% year over year. Long-term debt was roughly $2.2 billion, declining 26.5%.
The company repurchased $309 million of its common stock, accounting for 1.5% of its outstanding shares.
Outlook
Steel Dynamics expressed confidence in strong market conditions for domestic steel consumption in the second half of 2024. The company highlighted improved order entries and expected firming steel prices, citing steady performance in the automotive, non-residential construction and industrial sectors. It also noted positive impacts from onshoring manufacturing and public funding initiatives like the U.S. Infrastructure Act, benefiting its steel and fabrication operations.
The company reported a successful ramp-up of four new flat-rolled steel coating lines, which have already produced high-quality galvanized and painted products. It anticipates an additional 1.1 million tons of value-added steel products in the latter half of the year, with full benefits in 2025. This expansion will enhance supply-chain capabilities and increase higher-margin steel product offerings, currently making up around 65% of its steel revenues.
Additionally, the construction of an aluminum flat-rolled products mill is on track, with operations expected to begin in mid-2025. This mill will supply high-recycled content products to the sustainable beverage can and packaging industry as well as the automotive, industrial and construction sectors.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Steel Dynamics has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Steel Dynamics has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.