Why Steel Dynamics (STLD) Stock Is Lower In Pre-Market Trading Today

NEW YORK (TheStreet) -- Shares of Steel Dynamics Inc. (STLD) are down by -1.72% to $22.90 in pre-market trading on Monday following a ratings downgrade to "neutral" from "outperform" at Credit Suisse.

The firm said it lowered its rating on the steel producer and metals recycler as it believes recent outperformance has fully reflected the company's value.

Credit Suisse set a $23 price target on the stock.

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

"We rate STEEL DYNAMICS INC (STLD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."

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

  • The revenue growth came in higher than the industry average of 4.0%. Since the same quarter one year prior, revenues rose by 14.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 138.46% and other important driving factors, this stock has surged by 48.65% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • STEEL DYNAMICS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. 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 ($1.21 versus $0.83).
  • Net operating cash flow has significantly increased by 132.35% to $76.01 million when compared to the same quarter last year. In addition, STEEL DYNAMICS INC has also vastly surpassed the industry average cash flow growth rate of -8.77%.
  • STLD's debt-to-equity ratio of 0.62 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that STLD's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.78 is high and demonstrates strong liquidity.
  • You can view the full analysis from the report here: STLD Ratings Report

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