Steel Dynamics (STLD) Up 10.4% Since Last Earnings Report: Can It Continue?

Core Insights - Steel Dynamics reported Q4 2024 earnings of $1.36 per share, a decrease from $2.61 in the same quarter last year, but exceeded the Zacks Consensus Estimate of $1.29 [2] - Net sales for Q4 2024 were approximately $3.87 billion, down 8.5% year over year, and missed the Zacks Consensus Estimate of $3.96 billion [2] - For FY24, net sales totaled $17.5 billion, a decline from $18.8 billion in FY23, with earnings per share dropping to $9.84 from $14.64 [6] Segment Performance - Steel operations generated net sales of about $2.65 billion, down 9.2% year over year, with total steel shipments of approximately 3.02 million tons, slightly below the estimate of 3.1 million tons [3] - Metal recycling operations saw net sales of $482 million, reflecting a 9.7% increase from the previous year, although ferrous shipments of 1.42 million gross tons fell short of the estimate [4] - Steel fabrication operations reported sales of around $396.2 million, down 23.8% year over year, with shipments of 145,901 tons, also below estimates [5] Financial Position - In 2024, Steel Dynamics generated cash flow from operations of $1.8 billion, invested $1.9 billion in organic growth projects, paid $283 million in dividends, and repurchased $1.2 billion of common stock, representing 6% of total outstanding shares [7] - The company maintained strong liquidity of $2.2 billion as of December 31, 2024 [7] Market Outlook - Steel Dynamics anticipates favorable market conditions for rising demand in 2025, with stabilized steel pricing and strong customer optimism [8] - The company expects that demand for domestically manufactured steel products with reduced carbon emissions will support future domestic steel prices [8] - The ongoing onshoring of manufacturing and expected public funding for infrastructure projects are expected to bolster the domestic steel industry [8] Estimate Trends - Estimates for Steel Dynamics have trended downward recently, with a consensus estimate shift of -6.25% [10] - The stock currently holds a Zacks Rank 3 (Hold), indicating an expectation of in-line returns in the coming months [12]