Group 1 - Steel Dynamics (NASDAQ: STLD) shares have gained 6% over the past year, but remain below post-election highs due to concerns about weaker market conditions offsetting benefits from steel tariffs [1] - The company has over fifteen years of experience in making contrarian bets based on macro views and stock-specific turnaround stories to achieve outsized returns with a favorable risk/reward profile [1]

Core Viewpoint - Steel Dynamics reported quarterly earnings of $2.01 per share, missing the Zacks Consensus Estimate of $2.05 per share, and down from $2.72 per share a year ago, indicating a -1.95% earnings surprise [1] - The company posted revenues of $4.57 billion for the quarter, missing the Zacks Consensus Estimate by 1.34% and down from $4.63 billion year-over-year [2] Financial Performance - Over the last four quarters, Steel Dynamics has surpassed consensus EPS estimates three times [2] - The company has topped consensus revenue estimates two times over the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is $3.04 on revenues of $4.67 billion, and for the current fiscal year, it is $9.74 on revenues of $18.26 billion [7] Stock Performance - Steel Dynamics shares have increased approximately 15.4% since the beginning of the year, outperforming the S&P 500's gain of 7.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The Zacks Industry Rank places Steel - Producers in the bottom 14% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Steel Dynamics' stock performance [5]

Core Insights - Steel Dynamics, Inc. reported second-quarter earnings of $2.01 per share, missing the analyst consensus estimate of $2.51 [1] - Quarterly revenue was $4.57 billion, below the analyst consensus estimate of $4.76 billion and down from $4.63 billion in the same period last year [1] - The company experienced a significant sequential improvement in consolidated operating income of 39% and adjusted EBITDA of 19% due to stabilized steel pricing at higher levels [2] Financial Performance - Steel shipments totaled 3.3 million tons [4] - Net sales were reported at $4.6 billion, with operating income of $383 million and net income of $299 million [4] - Adjusted EBITDA reached $533 million, and cash flow from operations was $302 million [4] - As of June 30, 2025, the company had liquidity of $1.9 billion after repaying $400 million of senior notes due June 2025 [4] Stock Performance - Steel Dynamics stock was down 4.13% at $128.98 in extended trading on Monday [3]

Market Performance - Regional bank ETFs fell by 3.51%, while bank sector ETFs decreased by 3.13% [1][3] - Biotechnology index ETFs and global airline industry ETFs saw declines of up to 2.15%, and financial sector ETFs dropped by 1.71% [1] - Energy and consumer discretionary ETFs experienced declines of up to 1.44%, whereas technology sector ETFs rose by 0.89% [1] Sector Analysis - In the S&P 500 materials sector, all constituent stocks faced significant losses, with Newmont Mining down 5.71%, Freeport down 3.31%, and Steel Dynamics down 3.27% [2] - The materials sector index decreased by 2.11%, while the financials sector index fell by 1.65% [4] - The technology sector index increased by 1.27%, indicating a positive performance relative to other sectors [4] ETF Specifics - The current price of the regional bank ETF is $61.37, with a year-to-date increase of 3.07% [3] - The biotechnology ETF is priced at $129.05, showing a year-to-date decline of 2.30% [3] - The semiconductor ETF rose to $290.80, reflecting a year-to-date increase of 20.08% [3]

Company Performance - Steel Dynamics (STLD) closed at $135.07, down 1.67% from the previous trading session, underperforming the S&P 500's loss of 0.33% [1] - The stock has increased by 4.19% over the past month, outperforming the Basic Materials sector's gain of 1.87% and the S&P 500's gain of 4.07% [1] Upcoming Earnings - The upcoming earnings report for Steel Dynamics is expected on July 21, 2025, with projected EPS of $2.04, reflecting a 25.00% decrease compared to the same quarter last year [2] - Revenue is anticipated to be $4.67 billion, indicating a 0.76% increase from the same quarter last year [2] Full Year Estimates - For the full year, earnings are projected at $9.67 per share, showing a decline of 1.73%, while revenue is expected to reach $18.28 billion, representing a growth of 4.22% from the previous year [3] Analyst Estimates and Rankings - Recent changes in analyst estimates for Steel Dynamics suggest a shifting business landscape, with positive changes indicating analyst optimism regarding profitability [3] - The Zacks Rank system currently rates Steel Dynamics at 3 (Hold), with the consensus EPS estimate decreasing by 4.94% over the last 30 days [5] Valuation Metrics - Steel Dynamics has a Forward P/E ratio of 14.21, which is higher than the industry's Forward P/E of 13.46 [6] - The company has a PEG ratio of 1.07, compared to the Steel - Producers industry's average PEG ratio of 1 [6] Industry Context - The Steel - Producers industry is part of the Basic Materials sector and holds a Zacks Industry Rank of 149, placing it in the bottom 40% of over 250 industries [7] - The top 50% rated industries outperform the bottom half by a factor of 2 to 1, indicating the competitive landscape within the industry [7]

Group 1: Stock Performance - Steel Dynamics (STLD) closed at $131.50, with a +2.35% increase from the previous day, outperforming the S&P 500's daily gain of 0.8% [1] - The stock has risen by 1.39% in the past month, lagging behind the Basic Materials sector's gain of 2.02% and the S&P 500's gain of 5.12% [1] Group 2: Earnings Estimates - Steel Dynamics is set to release earnings on July 21, 2025, with projected EPS of $2.12, indicating a 22.06% drop compared to the same quarter last year [2] - The consensus estimate for revenue is $4.67 billion, reflecting a 0.76% increase from the prior-year quarter [2] Group 3: Fiscal Year Projections - For the entire fiscal year, earnings are estimated at $9.75 per share and revenue at $18.08 billion, showing changes of -0.91% and +3.08% respectively from the previous year [3] - Recent revisions in analyst estimates are crucial as they reflect near-term business trends, with positive revisions indicating a favorable business outlook [3] Group 4: Valuation Metrics - Steel Dynamics has a Forward P/E ratio of 13.18, which is higher than the industry average of 10.47, suggesting it is trading at a premium [6] - The company holds a PEG ratio of 0.99, compared to the industry average PEG ratio of 0.91, indicating a similar growth trajectory [7] Group 5: Industry Ranking - The Steel - Producers industry is part of the Basic Materials sector and currently has a Zacks Industry Rank of 86, placing it in the top 35% of over 250 industries [7] - The Zacks Industry Rank evaluates the performance of industry groups, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [8]

Core Insights - Steel Dynamics, Inc. (STLD) has provided earnings guidance for Q2 2025, estimating earnings per share (EPS) in the range of $2.00 to $2.04, an increase from $1.44 in Q1 2025 but a decrease from $2.72 in Q2 2024 [1][8] Group 1: Steel Operations - Profitability from steel operations is expected to be significantly higher than in Q1 2025, driven by wider metal spreads and an increase in average realized steel pricing, which is rising faster than scrap raw material costs [2] - Long product steel shipments have increased sequentially, while flat rolled volumes have slightly decreased due to inventory overhang from coated flat rolled steel imports [2] - The energy, non-residential building, automotive, and industrial sectors are continuing to drive demand for steel [2] - Steel division's pretax earnings are projected to be reduced by approximately $32 million in Q2 2025 due to a noncash write-off of consumable assets [2] Group 2: Metals Recycling Operations - Earnings from metals recycling operations are expected to remain stable sequentially in Q2 2025, with higher shipments compensating for lower realized pricing [3] Group 3: Steel Fabrication Operations - Earnings from steel fabrication operations are anticipated to decline in Q2 2025 compared to the previous quarter, attributed to consistent shipments and metal spread compression as raw material costs rise and average realized sales prices fall slightly [4] - The pace of order activity has increased, and the order backlog has strengthened, extending into 2025 with attractive pricing [4] - Demand is primarily driven by the commercial, data center, manufacturing, warehouse, and healthcare sectors [4] Group 4: Aluminum Operations - The aluminum team is successfully commissioning the Columbus, MS aluminum flat rolled products mill and the San Luis Potosi satellite recycled slab facility, with the first aluminum ingot cast in January 2025 in Mississippi and in March 2025 in Mexico [5] - The company expects to begin shipping material in mid-2025 [5] Group 5: Stock Performance - Shares of Steel Dynamics have decreased by 0.4% over the past year, contrasting with a 31.8% decline in its industry [5]

Earnings Performance - Commercial Metals (CMC) reported quarterly earnings of $0.74 per share, missing the Zacks Consensus Estimate of $0.85 per share, and down from $1.02 per share a year ago [1] - The earnings surprise was -12.94%, and the company has not surpassed consensus EPS estimates over the last four quarters [2] - The company posted revenues of $2.02 billion for the quarter, surpassing the Zacks Consensus Estimate by 0.49%, but down from $2.08 billion year-over-year [3] Stock Performance - Commercial Metals shares have declined approximately 1.9% since the beginning of the year, while the S&P 500 has gained 1.5% [4] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.12 on revenues of $2.09 billion, and for the current fiscal year, it is $3.02 on revenues of $7.76 billion [8] - The outlook for the Steel - Producers industry is positive, ranking in the top 34% of over 250 Zacks industries, suggesting potential for outperformance [9]

Core Viewpoint - Steel Dynamics, Inc. anticipates second quarter 2025 earnings per diluted share in the range of $2.00 to $2.04, a decrease from $2.72 in the same quarter last year and an increase from $1.44 in the first quarter of 2025 [1][2]. Group 1: Steel Operations - Profitability from steel operations is expected to be significantly stronger than the first quarter of 2025, driven by expanded metal spreads and increased average realized steel pricing [2]. - Long product steel shipments improved sequentially, while flat rolled volumes contracted modestly due to inventory overhang from coated flat rolled steel imports [2]. - Demand is primarily led by the energy, non-residential construction, automotive, and industrial sectors [2]. - Steel segment pretax earnings were reduced by approximately $32 million due to a noncash write-off of consumable assets [2]. Group 2: Metals Recycling Operations - Earnings from metals recycling operations are expected to remain steady sequentially, as stronger shipments offset lower realized pricing [3]. Group 3: Steel Fabrication Operations - Earnings from steel fabrication operations are expected to decline compared to the first quarter of 2025, due to steady shipments and metal spread compression from increased raw material costs [4]. - The pace of order activity increased, and the order backlog improved, supported by demand from commercial, data center, manufacturing, warehouse, and healthcare sectors [4]. - Domestic manufacturing investment and the U.S. infrastructure program are expected to positively impact demand for steel products [4]. Group 4: Aluminum Operations - The company is successfully commissioning its aluminum flat rolled products mill in Columbus, Mississippi, and a satellite recycled slab center in San Luis Potosi, Mexico [5]. - The first aluminum ingot was cast in January and March 2025, with shipping expected to begin mid-2025 [5]. Group 5: Stock Repurchase - As of June 11, 2025, the company repurchased $179 million, or one percent, of its common stock during the second quarter [6]. Group 6: Company Overview - Steel Dynamics is a leading industrial metals solutions company, operating with a circular manufacturing model and focusing on lower-carbon-emission products [7]. - The company is one of the largest domestic steel producers and metal recyclers in North America, with ongoing investments in aluminum operations to diversify its product offerings [7].

Industry Overview - The S&P Steel Index is experiencing growth in 2025, driven by tariff leverage, strong balance sheets, and high returns on capital [1] - As of June 12, the S&P Steel Sub-Industry Index has increased by 8.40% year to date, indicating stabilization in the US steel sector [1] - President Trump's decision to double US steel import tariffs from 25% to 50% on June 4, 2025, is a significant factor contributing to this growth [1][2] Tariff Impact - The announcement of the tariff increase led to immediate gains in steel stocks, with Cleveland-Cliffs rising 26% in one day, while Steel Dynamics and Nucor saw increases of 10-11% [2] - Benchmark steel prices rose from $725 per metric ton before the tariff announcement to $875 per metric ton currently, effectively raising the price floor for domestic steel [2] Market Dynamics - The steel industry's rally is attributed to both short-term catalysts and long-term structural forces, including federal spending on infrastructure and reshoring efforts [3] - Supply chain restocking, recovery in the auto sector, and disciplined capital returns from leading companies like Nucor and Steel Dynamics contribute to a more stable sector profile [3] Construction and Demand - Domestic construction activity is robust, particularly in commercial construction, which supports demand for structural steel despite higher interest rates [7] - Key steel-consuming industries, such as automotive and machinery manufacturing, are showing resilience, while renewable energy infrastructure expansion creates new demand for steel [7] Company Highlights - Nucor, trading at $121 per share with a 1.82% dividend yield, is noted for its industry-leading margins and strong balance sheet, despite recent volatility due to tariff negotiations [9] - Steel Dynamics, priced at $133 per share with a 1.50% dividend yield, has shown a 16.7% increase year to date and is recognized for its operational efficiency and low production costs [10][11] - ArcelorMittal, trading at $30 per share with a 1.55% dividend yield, has seen a 30.6% increase year to date and is expected to benefit from strategic acquisitions and joint ventures [12][13] Investment Considerations - Investors are advised to focus on companies with high-margin, value-added products and sustainable dividend growth rather than chasing commodity pricing volatility [14] - Strong fundamentals, including cost-efficient production, strong returns on capital, and quality net margins, are essential for evaluating steel stocks [16]