Headquartered in Fort Wayne, Indiana, Steel Dynamics, Inc. (STLD) is a top U.S. steel producer and metal recycler known for its diversity in specialty products. Valued at a market cap of $19 billion, the company operates through three segments: Steel Operations, Metals Recycling, and Steel Fabrication.
Shares of Steel Dynamics have failed to match the broader market's performance over the past year. While the stock has surged 20.6% over this time frame, the S&P 500 Index ($SPX) has rallied by 27.5%. In 2024, the stock rose 3.9%, compared to SPX’s 17.8% return on a YTD basis.
Narrowing the focus, STLD has surpassed the VanEck Steel ETF (SLX), which has gained 2.7% over the past year and declined 8.9% on a YTD basis.
On Jul. 17, Steel Dynamics reported its Q2 earnings report, but the stock declined for six consecutive trading sessions despite exceeding market expectations. It reported a second-quarter profit of $428 million, or $2.72 per share, surpassing Wall Street expectations of $2.67 per share. The company also beat revenue forecasts, posting $4.6 billion compared to the expected $4.4 billion.
For the current fiscal year, ending in December, analysts expect STLD’s EPS to decline 28.2% year over year to $10.74. Moreover, the company’s earnings surprise history is mixed, exceeding the consensus estimate in two of the last four quarters and missing on two other occasions.
Steel Dynamics stock has a consensus “Hold” rating overall. Out of 11 analysts covering the stock, two recommend a "Strong Buy," seven suggest a "Hold," and two advise a “Strong Sell.”
The consensus rating has been consistent over the past months.
On Jul. 16, JPMorgan Chase & Co. (JPM) raised Steel Dynamics' price target to $120 from $118 but maintained an “Underweight” rating. While Q2 results may meet or exceed conservative expectations, Q3 comments from North American steel companies are expected to be "downbeat" due to weaker-than-usual seasonal activity. JPMorgan believes stocks are bottoming but does not foresee a strong rebound.
The mean price target of $133.70 suggests an 8.9% premium from STLD's current price levels. The Street-high price target of $165 suggests an upside potential of 34.4%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
