Why Steel Dynamics (STLD) Stock Is Up In Pre-Market Trading Thursday

NEW YORK (TheStreet) -- Shares of Steel Dynamics Inc. (STLD) are up 1.60% to $18.14 in pre-market trading on Thursday following a ratings upgrade to "outperform" from "perform" at Cowen & Co.  (COWN).

The firm said it raised its rating on the U.S. steel producer and metal recycler as it believes the company will benefit from the industry's improved pricing.

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Separately, TheStreet Ratings team rates STEEL DYNAMICS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate STEEL DYNAMICS INC (STLD) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, notable return on equity, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 1.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, STEEL DYNAMICS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • STEEL DYNAMICS INC's earnings per share declined by 19.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, STEEL DYNAMICS INC increased its bottom line by earning $0.83 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus $0.83).
  • You can view the full analysis from the report here: STLD Ratings Report
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