Indiana-based Steel Dynamics, Inc. (STLD) is a steel producer and metal recycler that makes and markets steel products, processes and sells recycled ferrous and nonferrous metals, and fabricates and sells steel joist and decking products. Valued at a market cap of $18.5 billion, the company operates using a circular manufacturing model, producing lower-carbon-emission, quality steel using electric arc furnace (EAF) technology with recycled ferrous scrap as the primary input.
Companies worth $10 billion or more are generally described as “large-cap” stocks and Steel Dynamics fits right into that category, with its market cap exceeding this threshold. As a leading diversified steel producer and metals recycler, the company has an estimated steelmaking and coating capacity of 13 million tons, located throughout the United States and Mexico.
The company has declined 21.8% from its 52-week high of $155.56, achieved on Nov. 6. Nevertheless, shares of STLD have rallied 9.6% over the past three months, massively outperforming the broader Materials Select Sector SPDR Fund’s (XLB) 5.5% decline over the same time frame.
However, in the longer term, STLD has declined 2.3% over the past 52 weeks, underperforming XLB’s 3.8% returns. On a YTD basis, shares of STLD are up 3.1%, slightly lagging behind XLB’s 3.4% gains over the same time frame.
To confirm its bearish trend, STLD has been trading below its 200-day and 50-day moving average since mid-December.
STLD’s shares closed up 4% after its better-than-expected Q3 earnings release. The company’s net income of $2.05 per share declined 40.9% on a yearly basis but exceeded the Wall Street estimates of $1.98. Its revenue fell 5% year-over-year to $4.34 billion and outpaced the forecasted figure by 2.1%. Although the underlying steel demand remained stable in the quarter, lower average realized steel prices adversely affected STLD's results. Furthermore, optimism around Donald Trump's administration, which suggested possible steel tariffs and corporate tax cuts, caused shares of STLD to rise 13.8% on November 6.
Steel Dynamics has outperformed its rival, Nucor Corporation (NUE), which declined 28.2% over the past 52 weeks and 28.7% on a YTD basis.
Despite STLD’s recent outperformance relative to its broader sector, analysts remain cautious about its prospects. The stock has a consensus rating of “Hold” from the 12 analysts covering it, and the mean price target of $142 suggests a 16.7% premium to its current levels.
