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Steel Dynamics' (STLD) Earnings and Sales Top Estimates in Q3

Steel Dynamics, Inc. STLD logged net income of $100 million or 47 cents per share in third-quarter 2020, down from $151 million or 69 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share came in at 51 cents, which topped the Zacks Consensus Estimate of 47 cents.

Net sales in the quarter fell roughly 8% year over year to $2,330.8 million. Nevertheless, the figure beat the Zacks Consensus Estimate of $2,190.8 million. The company saw a strong recovery in domestic steel demand, especially in automotive, during the quarter. It also witnessed a recovery in flat roll steel spot prices.

Steel Dynamics, Inc. Price, Consensus and EPS Surprise

 

Steel Dynamics, Inc. Price, Consensus and EPS Surprise

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

 

Segment Highlights

Net sales in the company's steel operations declined around 12% year over year to $1,696.5 million in the reported quarter. Operating income fell roughly 40% year over year to $143.6 million. Average product selling price for the unit declined roughly 9% year over year to $734 per ton in the reported quarter. Steel shipments fell 1% year over year to roughly 2.68 million tons.

The company's fabrication operations raked in sales of $241.5 million, down around 2% year over year. Operating income rose roughly 11% to $39.3 million on a year-over-year basis.

Net sales in metals recycling operations slipped roughly 3% year over year to $272.5 million. The segment’s posted operating income of $15.5 million against operating income of $2.9 million in the year-ago quarter.

Financial Position

Steel Dynamics ended the third quarter with cash and cash equivalents of $1,267.6 million, up 11% year over year. Long-term debt was around $2,636.6 million, up 12% year over year.

The company generated $151.8 million of cash flow from operations in the third quarter.

Outlook

Steel Dynamics stated that it expects sustained customer demand and pricing strength through the remainder of 2020 and into 2021. The automotive sector has witnessed the strongest recovery while construction remained resilient. However, softness remains in the energy market, the company noted.

Price Performance

Shares of Steel Dynamics have gained 15.8% in the past year compared with the industry’s 0.9% rise.

 

 

Zacks Rank & Key Picks

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

Better-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited AEM, Eldorado Gold Corporation EGO and Barrick Gold Corporation GOLD.

Agnico Eagle has a projected earnings growth rate of 104.1% for the current year. The company’s shares have rallied around 79% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Eldorado Gold has a projected earnings growth rate of 2,450% for the current year. The company’s shares have shot up roughly 74% in a year. It currently carries a Zacks Rank #1.

Barrick Gold has an expected earnings growth rate of 96.1% for the current year. The company’s shares have surged around 61% in the past year. It currently carries a Zacks Rank #1.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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