Steel Dynamics said it expects earnings of 38 cents to 42 cents a share for the fourth quarter, below the 44 cents a share analysts surveyed by Thomson Reuters expect. The company cited acquisition costs and low raw material prices as reasons for the low guidance.
The company's recycling operations are expected to record a "minimal loss" in the quarter, compared to an operating income of $13 million in the third quarter. Steel Dynamics said it expects shipments and ferrous metal margins to fall about 10% in the fourth quarter, compared to the third quarter.
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 multiple 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, increase in stock price during the past year, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. 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 3.5%. Since the same quarter one year prior, revenues rose by 22.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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 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 ($1.35 versus $0.83).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 58.6% when compared to the same quarter one year prior, rising from $57.49 million to $91.17 million.
- Net operating cash flow has increased to $249.22 million or 35.99% 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 -29.96%.
- You can view the full analysis from the report here: STLD Ratings Report