Steel Dynamics (STLD) to Post Q1 Earnings: What's in the Offing?

Zacks Equity Research
·4 min read

Steel Dynamics, Inc. STLD is set to release first-quarter 2021 results after the closing bell on Apr 19. The company’s results will likely reflect the benefits of higher steel prices and strong end-market demand.

Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 9.6%, on average. The company posted an earnings surprise of around 12.8% in the last reported quarter.

Shares of the company have rallied 132.6% in the past year compared with 155.3% rise of the industry.

Let’s see how things are shaping up for this announcement.

Zacks Model

Our proven model predicts an earnings beat for Steel Dynamics this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for Steel Dynamics is +0.42%. The Zacks Consensus Estimate for earnings for the first quarter is currently pegged at $1.98. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Steel Dynamics currently carries a Zacks Rank #2.

What do the Estimates Say?

Steel Dynamics envisions earnings of $1.88-$1.92 per share for the first quarter that suggests an increase from 89 cents in the previous quarter and 88 cents in the prior-year quarter. Adjusted earnings for the quarter have been forecast at $1.94-$1.98 per share, which Steel Dynamics expects could be a record figure.

The Zacks Consensus Estimate for revenues for Steel Dynamics for the to-be-reported quarter is at $3,276 million, suggesting a year-over-year rise of 27.2%.

Moreover, the Zacks Consensus Estimate for shipments for the company’s steel operations for the quarter currently stands at 2,458,482 tons, indicating a decline of around 1% year over year. The consensus estimate for average product selling price for steel operations stands at $1,100, suggesting a roughly 42% year-over-year increase.

A Few Factors to Watch

The company’s first-quarter results are likely to have benefited from demand strength across key markets and higher domestic steel prices. A strong rebound in the automotive market and a resilient construction market are expected to have aided its performance.

Steel Dynamics, last month, noted that steel demand in the United States remained strong in the first quarter led by momentum across automotive and construction sectors. Demand for ferrous scrap was also strong in the first quarter, as domestic steel production continued its momentum. Higher demand is likely to have supported the company’s shipments for the quarter.

Average realized flat roll steel product pricing is also expected to have increased significantly during the first quarter. Higher flat roll steel prices aided by strong demand is likely to have boosted profitability of the company’s steel operations in the first quarter.

Notably, U.S. steel prices have staged a strong recovery on higher demand, supply shortages and higher raw material costs, and hit record levels after plummeting to pandemic-induced multi-year lows in August 2020. The benchmark hot-rolled coil (“HRC”) prices started to recover in September 2020 and are shooting up since then. Notably, HRC prices zoomed past $1,200 per short ton for the first time in February 2021 and cruised above the $1,300 per short ton level last month amid tight supply and surging demand.

As such, higher domestic steel prices are likely to have boosted Steel Dynamics’ selling prices and supported its revenues and margins in the to-be-reported quarter.

Steel Dynamics, Inc. Price and EPS Surprise

Steel Dynamics, Inc. Price and EPS Surprise
Steel Dynamics, Inc. Price and EPS Surprise

Steel Dynamics, Inc. price-eps-surprise | Steel Dynamics, Inc. Quote

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Dow Inc. DOW, scheduled to release earnings on Apr 22, has an Earnings ESP of +2.55% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese Corporation CE, scheduled to release earnings on Apr 22, has an Earnings ESP of +2.61% and carries a Zacks Rank #1.

Albemarle Corporation ALB, scheduled to release earnings on May 5, has an Earnings ESP of +4.29% and carries a Zacks Rank #3.

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