Steel Dynamics Expects Lower Q3 Earnings Amid Pricing Pressures

Earnings Guidance - Steel Dynamics, Inc. (STLD) has issued earnings guidance for Q3 2024 in the range of $1.94-$1.98 per share, a decline from $2.72 per share in Q2 2024 and $3.47 in Q3 2023 [1] - The profitability of STLD's steel operations is expected to be significantly lower than in Q2 due to reduced average realized pricing in flat rolled operations, with approximately 80% of this business being contract-based and linked to lagging pricing indices [1] Steel Operations - Flat rolled steel prices have stabilized and are showing improvement, with consistent underlying demand [1] - The metals recycling division's earnings for Q3 2024 are anticipated to align with Q2 results, as steady volumes offset slightly lower realized pricing [1] Steel Fabrication Segment - Earnings in the steel fabrication segment are forecasted to be moderately lower than the previous quarter due to a slight dip in average realized pricing, but the order backlog remains steady and extends into Q1 2025 [2] - Current order activity is stable, and demand is expected to grow in 2025, driven by a decline in interest rates, the U.S. infrastructure program, and increasing onshoring efforts [2] Stock Repurchase and Performance - Steel Dynamics has repurchased $307 million worth of its common stock through September 11, 2024, demonstrating confidence in the company's earnings outlook and cash flow [2] - Shares of Steel Dynamics have gained 13.1% in the past year, contrasting with a 14.3% decline in its industry [2] Zacks Rank and Comparisons - Steel Dynamics currently holds a Zacks Rank 3 (Hold) [3] - Better-ranked stocks in the Basic Materials space include Hawkins, Inc. (HWKN), Carpenter Technology Corporation (CRS), and Eldorado Gold Corporation (EGO), each with a Zacks Rank 1 (Strong Buy) [3] Earnings Estimates for Comparables - The Zacks Consensus Estimate for Hawkins' current fiscal-year earnings is $4.14 per share, indicating a rise of 15.3% from the previous year, with a stock rally of around 95% in the past year [3] - Carpenter Technology's current-year earnings estimate is $6.06 per share, reflecting a 27.9% year-over-year rise, with a stock surge of nearly 108.8% in the past year [4] - Eldorado Gold's current-year earnings estimate is $1.35 per share, indicating a year-over-year rise of 136.8%, with shares surging nearly 75.3% in the past year [4]