Steel Dynamics, Inc. STLD has provided its earnings guidance for the fourth quarter of 2016. The company expects earnings per share to be in the range of 36 cents to 40 cents. The company also expects charges of $16.5 million in the quarter or 4 cents per share, related to debt refinancing and repayments actions. Adjusted earning, excluding the charges, are expected to be in the range of 40 cents to 44 cents.
Steel Dynamics' earnings projection is lower than third-quarter 2016 earnings of 64 cents per share but higher than the adjusted earnings of 9 cents earned in the fourth quarter of 2015. In the fourth quarter of 2015, the reported loss of $1.04 per share included non-cash impairment charges, associated with the company's metals recycling operations, of $1.13 a share.
Steel Dynamics may face other non-cash impairment charges in the fourth quarter of 2016. The company is currently assessing the asset carrying values related to its 82%-owned and idled Mining Resources joint venture,and no impact for potential non-cash impairment charges has been included in the earnings guidance for the fourth quarter.
In the fourth quarter of 2016, Steel Dynamics expects steel shipments as well as average steel product pricing to be lower sequentially. The lower estimated earnings from the steel operations were driven by weak flat roll's operations in the beginning of the quarter. However, the operations have improved in Nov and Dec and are expected to get better in 2017.
Shares of Steel Dynamics fell roughly 1.9% to close at $36.68 on Dec 16.
Steel Dynamics have reported positive earnings surprise in three of the trailing four quarters. The company's shares have surged 105.3% year to date, outperforming the Zacks categorized Steel-Producers industry's gain of 76% over the same period.
Steel Dynamics reported adjusted earnings of 65 cents per share in the third quarter of 2016, was in line with management's expected range of 63−67 cents and above the prior-year quarter figure of 25 cents. The improvement in the bottom line was backed by positive momentum in the flat roll metal spread expansion. Sales for the reported quarter increased 7.7% year over year to $2.1 billion.
Steel Dynamics' share repurchase program and a capital allocation strategy is evident of its strong balance sheet and liquidity position. The company remains committed toward increasing shareholders' value via organic and strategic growth.
STEEL DYNAMICS Price
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Zacks Rank & Key Picks
Steel Dynamics currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the steel space include POSCO PKX , GrupoSimec S.A.B. de C.V. SIM and AK Steel Holding Corp. AKS .
POSCO has an expected long-term growth of 5% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
GrupoSimec, with a Zacks Rank #2 (Buy), saw its estimates for the current quarter increase roughly 53% in the last 60 days.
AK Steel has an expected long-term growth of 5%. The company carries a Zacks Rank #2.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AK STEEL HLDG (AKS): Free Stock Analysis Report POSCO-ADR (PKX): Free Stock Analysis Report STEEL DYNAMICS (STLD): Free Stock Analysis Report GRUPO SIMEC SA (SIM): Free Stock Analysis Report To read this article on Zacks.com click here.