Steel Dynamics (STLD) reports Q1 results and sees strong demand

Steel Dynamics, Inc. STLD issued a profit forecast of $ 1.88 to $ 1.92 per share for the first quarter of 2021. The company expects adjusted earnings of $ 1.94 to $ 1.98 per share for the first quarter, excluding the impact of costs related to building the company’s Sinton Texas Flat Roll Steel Mill’s growth investment of 18 Million dollars or 6 cents per share. Steel Dynamics believes that forecast adjusted earnings could hit a record quarter for the company.

The forecast envisages a sequential increase of 89 cents per share and an adjusted profit of 97 cents per share in the fourth quarter of 2020. In addition, the profit in the same quarter of the previous year was 88 cents per share.

The profitability of the company’s steel business for the first quarter is expected to increase significantly on a sequential basis, led by widening flat-rolled metal spreads as flat-rolled steel prices continue to be supported by strong demand. The average realized quarterly prices for flat rolled steel products are expected to rise significantly, which more than compensates for the higher scrap costs. Steel shipments for the quarter are expected to increase sequentially across the company’s portfolio. Domestic steel demand also remains strong, led by dynamism in the automotive and construction sectors.

Incoming orders also remain solid as strong demand coupled with low flat rolled steel inventories underpins higher steel sales. The company believes the momentum will lead to stronger results in the second quarter.

The demand for scrap iron was also strong in the first quarter as domestic steel production continued its dynamic. Steel Dynamics’ metal recycling revenues are also expected to increase sequentially, driven by higher volumes and improved metal margins as average quarterly raw material prices skyrocket.

The company also expects first-quarter earnings from steelmaking to decrease quarter-over-quarter, reflecting higher steel cost. Deliveries in the steel industry are expected to reach record levels in the first quarter due to strong order activity and optimistic customer orientation with regard to non-residential construction projects. Steel girder and deck product prices have also increased due to strong demand and higher steel costs.

Steel Dynamics stocks are up 159.2% over the past year, compared to a 185.9% year-over-year increase Industry.

Zacks Rank and Other Important Tips

Steel Dynamics currently has a Zacks Rank # 1 (Strong Buy).

Some other top notch stocks in the raw materials field are there Fortescue Metals Group Limited FSUGY, Ashland Global Holdings Inc. ASH and Impala Platinum Holdings Limited IMPUY.

Fortescue has a projected earnings growth rate of 107.8% for the current fiscal year. The company’s shares are up 146.9% in one year. It currently flaunts a # 1 Zacks rank. You can see The full list of current Zacks # 1 ranked stocks can be found here.

Ashland has an expected earnings growth rate of 83.9% for the current fiscal year. The company’s shares rose 96% over the past year. It currently has a # 1 Zacks rank.

Impala has an expected earnings growth rate of 197.6% for the current fiscal year. The company’s shares are up 480.5% over the past year. It currently flaunts a # 1 Zacks rank.

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