Steel Dynamics Sees Higher Q2 Earnings on Increased Shipments

Steel Dynamics, Inc. STLD has provided an upbeat earnings guidance for second-quarter 2018. The steel maker expects earnings for the quarter in the band of $1.46 to $1.50 per share. That is an increase from 96 cents per share recorded in the previous quarter and 63 cents per share it earned a year ago. Analysts polled by Zacks currently expect earnings of $1.40 per share for the quarter.Steel Dynamics expects profitability from its steel operations to improve meaningfully on a sequential comparison basis in the second quarter on the back of higher steel shipments and metal spread expansion. Also, average quarterly steel product prices are expected to increase more than scrap costs. This is because prices of steel across the platform improved throughout the quarter aided by strong steel demand in the domestic market, the company noted.Steel Dynamics expects steel consumption and market dynamics to remain strong during 2018, supported by strong steel demand fundamentals and customer optimism.Steel Dynamics anticipates profitability of its metals recycling platform to remain consistent sequentially in the second quarter as higher shipments are offset by ferrous and non-ferrous metal spread compression.Moreover, the company expects earnings of its steel fabrication business to decline sequentially as rising steel input costs will more than offset higher average sales prices and improved shipments. It continues to see strong steel fabrication order activity and expanding order backlogs.Shares of Steel Dynamics have gained around 12.9% over the last six months. The company has also outperformed its industry's rise of roughly 5.6% over the same time frame. Forecast-topping earnings performance in the first quarter, upbeat outlook and the Trump administration’s trade actions on imported steel have contributed to the rally in Steel Dynamics' shares.

 

Steel Dynamics, last month, agreed to acquire Companhia Siderurgica Nacional, LLC (Heartland) from CSN Steel, S.L.U., for $400 million in cash. Heartland has the capability to produce 1 million tons of cold roll steel annually, with galvanizing capacity of 360,000 tons.The buyout is expected to increase Steel Dynamics' total shipping capability and annual flat roll steel shipping capacity to 12.4 million tons and 8.4 million tons, respectively. The additional exposure to lighter-gauge and greater width flat roll steel offerings will also expand its portfolio of value-added products, strengthening Steel Dynamics’ position as a leading steel producer in North America.

Steel Dynamics, Inc. Price and Consensus

 

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Steel Dynamics, Inc. Price and Consensus | Steel Dynamics, Inc. Quote

 

Zacks Rank & Other Stocks to ConsiderSteel Dynamics currently carries a Zacks Rank #3 (Hold).Better-ranked stocks worth considering in the basic materials space include Westlake Chemical Corporation WLK, The Chemours Company CC and Celanese Corporation CE, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied roughly 70% over a year.Chemours has an expected long-term earnings growth rate of 15.5%. The company’s shares have shot up around 30% in a year.Celanese has an expected long-term earnings growth rate of 8.9%. Its shares have rallied roughly 22% over a year.Today's Stocks from Zacks' Hottest StrategiesIt's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 – 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.See Them Free>>

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