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Steel Dynamics (STLD) Unveils Earnings Guidance for Q3


Steel Dynamics, Inc. STLD has provided third-quarter 2016 earnings guidance. The company expects earnings to be in the band of 63–67 cents per share for the quarter, compared with 58 cents per share in the prior quarter and 25 cents in the year-ago quarter.

The company anticipates profitability from its steel operations to grow due to significant metal spread expansion in the third quarter compared with the prior quarter. The company projects average quarterly realized steel product pricing to increase more than additional costs derived from higher priced ferrous scrap utilized in the quarter. However, lower steel shipments across the platform are expected to offset some of the favorable margin impact.

The improvement in company’s earnings is expected to be driven by the its flat roll operations. While the automotive sector remains strong and the construction market is witnessing gradual improvement, demands from heavy equipment, agricultural and energy sectors remain challenging.

Profitability for the company's metals recycling platform has been forecast to be lower for the third quarter than the second quarter. Both ferrous and non-ferrous shipments are anticipated to fall, and the company expects ferrous metal spread to contract as market prices have been on a declining trend.

The company's fabrication platform continues to see stable demand from the non-residential construction sector, with order entry remaining steady. Fabrication shipments are expected to remain at par with sequential product pricing improvement in the third quarter. Further, higher raw material flat roll steel costs are anticipated to result in metal spread compression and lower sequential fabrication earnings for the third quarter.

Steel Dynamics also declared a quarterly cash dividend of 14 cents per share, payable on or about Oct 14, 2016 to shareholders of record at the close of business as of Sep 30, 2016.

The company’s shares fell around 0.4% to close at $24.21 on Sep 20.



Steel Dynamics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials sector include Angang Steel Company Limited ANGGY, Ternium S.A. TX and BHP Billiton Limited BHP all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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