Steel Dynamics Shares Up 4% Following Q3 Guidance

Steel Dynamics (NASDAQ:STLD) shares rose more than 3% today after UBS upgraded the stock from Neutral to Buy, maintaining a $149 price target, as stronger-than-expected tariff protections and operational upside create a favorable setup for the steelmaker.

Following recent U.S. election developments, import protections on steel and aluminum have outpaced expectations, helping to fuel a sharp rally in hot-rolled coil (HRC) prices. Despite this, Steel Dynamics' stock has de-rated alongside broader market weakness amid escalating trade tensions, creating what UBS views as a compelling entry point.

While UBS anticipates a pullback in steel prices later in the year, it believes $800/ton HRC pricing is sustainable, even amid softening demand. This forecast is supported by import parity improvements and a steeper cost curve, both of which have strengthened throughout the year.

Beyond pricing, UBS highlights Steel Dynamics’ organic growth pipeline, including around $1.2 billion in expected EBITDA contributions from its Sinton facility and aluminum operations. This growth, paired with substantial free cash flow potential—estimated at 10–14% yield by 2026–2028 (adjusted for buybacks), underpins a strong capital return profile.

With earnings momentum building into Q2, room for upside if HRC spot prices hold, and a more attractive valuation, UBS sees this as an opportune time to gain exposure to Steel Dynamics' long-term growth and cash generation potential.

Steel Dynamics Inc. (NASDAQ:STLD) is a prominent player in the steel industry, known for its innovative steel production and recycling operations. The company competes with other major steel producers like Nucor Corporation and ArcelorMittal. On October 21, 2024, Glenn Pushis, Senior Vice President of Steel Dynamics, sold 5,647 shares at $132.95 each, retaining 158,987 shares post-transaction.

Steel Dynamics recently reported strong third-quarter earnings, with GAAP earnings of $2.05 per share, surpassing the expected $1.97. The company achieved quarterly sales of $4.34 billion, exceeding forecasts of $4.177 billion. Despite a year-over-year decline in net sales, the results reflect the company's ability to outperform market expectations.

Mark D. Millett, Co-Founder, Chairman, and CEO, emphasized the company's robust performance, highlighting an adjusted EBITDA of $557 million and cash flow from operations of $760 million. Steel Dynamics increased its liquidity to $3.1 billion, invested $621 million in growth, and returned $381 million to shareholders through dividends and share repurchases.

The company's three-year after-tax return on invested capital is an impressive 26%, showcasing its commitment to delivering high returns. Analysts have raised their forecasts for Steel Dynamics, indicating confidence in its continued strong performance. Despite challenges from lower average realized steel prices, the company managed to increase steel shipments to around 3.2 million tons.

Currently, STLD is priced at $132.81, experiencing a 2.76% decrease today. The stock has seen a low of $132.63 and a high of $137.01 during the day's trading. Over the past year, STLD reached a high of $151.34 and a low of $98.32, with a market capitalization of approximately $20.49 billion.

• The consensus price target for Steel Dynamics, Inc. (NASDAQ:STLD) has remained stable, indicating a steady analyst view on the company's potential.
• Despite a stable outlook, Steel Dynamics is expected to report a decline in third-quarter earnings due to reduced steel prices.
• Goldman Sachs sets a more cautious price target of $114 for STLD, reflecting concerns over anticipated earnings decline and current pricing pressures.

Steel Dynamics, Inc. (NASDAQ:STLD) is a key player in the U.S. steel production and metal recycling industry. The company operates through three main segments: Steel Operations, Metals Recycling Operations, and Steel Fabrication Operations. These segments serve diverse markets such as construction, automotive, and manufacturing, making Steel Dynamics a versatile entity in the industry.

The consensus price target for STLD has shown stability over the past year. Last month, the average price target was $138, slightly lower than the last quarter's $139.17. A year ago, it was $135.18. This consistency suggests that analysts have a steady view of the company's potential, with minor adjustments reflecting market conditions or company performance updates.

Despite this stable outlook, Steel Dynamics is expected to report a decline in its third-quarter earnings. This anticipated downturn is primarily due to reduced steel prices, as highlighted by Zacks. However, the company maintains a robust backlog extending into 2025, indicating ongoing demand for its products.

Goldman Sachs has set a price target of $114 for STLD, reflecting their analysis and expectations for the company's stock performance amid current pricing pressures. This target suggests a more cautious view compared to the consensus, possibly due to the anticipated earnings decline.

Since its last earnings report, STLD has experienced an 8.6% decline, drawing attention from investors and analysts. The market is closely watching how Steel Dynamics will navigate these challenges and what strategic moves it might make to regain investor confidence, as highlighted by Zacks.

Shares of Steel Dynamics, Inc. (NASDAQ:STLD) are trading around 4% higher today following the company’s Q3 guidance with expected EPS in the range of $4.78 to $4.82.

Analysts at Deutsche Bank raised their price target on the company’s shares to $98 from $72. While concerns of an anticipated correction in steel product pricing likely weighed on the share price (underperforming peers over the last 6 months), the analysts think the company is uniquely positioned with its lagged flow through of spot steel pricing, impressive WC management and the fact that costs are largely contained through its captive iron ore.

Since May, steel equities have largely looked through the earnings upgrades as investors have tried to avoid getting involved at the cyclical peak. This has left the sector on highly attractive valuation metrics, and although Deutsche Bank doesn't disagree that steel prices are likely to come off (from historical highs), it expects several drivers to support margins materially above mid-cycle levels for the next 2-3 years.