Shares of Steel Dynamics Inc. (STLD) touched a new 52-week high of $23.38 on Aug 22. Its shares ended the day slightly lower at $23.30.
Shares of this steel company, which has a market cap of around $5.6 billion, have shot up 49.5% over a year. Its year-to-date return is around 20.8%, much higher than the S&P 500’s total return of 9%. Average volume of shares traded over the last three months is roughly 3,497.5K. The company’s long-term projected EPS growth rate is 8.5%.
What’s Driving STLD Up?
Steel Dynamics posted strong second-quarter results on Jul 21. Its segments recorded higher profits compared to the previous quarter, which was hit by bad weather. The sequential improvement was driven by record shipments and improved metal spreads backed by strong demand with continued market diversification and customer focus.
Reported earnings in the quarter were 31 cents per share compared with 13 cents per share in the year-ago quarter. Profit jumped around two and a half fold year over year to $72 million. The company’s sales were $2,069.8 million in the quarter, up 14.9% year over year. Total sales increased in all the segments with highest sales in the Steel Fabrications Operations.
Operating income increased 90.6% year over year and 63% sequentially to $132 million in the quarter. The sequential increase was due to higher profitability across all its segments.
Steel Dynamics remains optimistic about increasing demand for its products. It also expects recent growth projects to contribute to the company’s earnings. The automotive and manufacturing markets remain strong, and the company believes that increase in domestic energy investments will continue to strengthen.
Steel Dynamics is hopeful that its diversified products and team will enable it to achieve a competitive edge. Moreover, organic growth projects and latent steel capacity, along with the planned acquisition of the Severstal Columbus steel mill are expected to contribute to the company’s growth.
Steel Dynamics currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked stocks worth considering in the steel industry include Grupo Simec S.A.B. de C.V. (SIM), AK Steel Holding Corp. (AKS) and United States Steel Corp. (X). While Grupo Simec sports a Zacks Rank #1 (Strong Buy), AK Steel Holding and United States Steel carry a Zacks Rank #2 (Buy).
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