Steel Dynamics (STLD) Provides Earnings Guidance For Q3

Steel Dynamics, Inc. (NASDAQ:STLD) recently provided its third-quarter 2017 earnings guidance. The company expects earnings to be between 61 cents and 65 cents per share, including estimated charges of $8 million or 2 cents (before taxes) associated with debt refinancing activities during the quarter.

Barring one-time items, adjusted earnings are expected to be in the band of 63 cents and 67 cents per share, compared to 63 cents recorded in second-quarter 2017 and 64 cents recorded a year ago.

Steel Dynamics expects profitability from its steel operations for the third quarter to be similar to second-quarter results as higher shipments are expected to be offset by metal spread compression.

The company expects average quarterly steel product pricing to be consistent and average scrap costs to be higher owing to high levels of steel imports putting pressure on domestic steel prices, which are unable to maintain pace with raw material costs. The flat roll operations are expected to report lower sequential earnings on sequential basis in the third quarter owing to metal spread compression. Long product operations are expected to report higher earnings on sequential basis on the back of improved structural, engineered bar and merchant steel shipments.

Steel Dynamics sees demand from the energy sector to continue to strengthen. Demand for the construction sector also remains strong. The company’s steel operations are expected to continue to gain market share even though demand from the domestic automotive sector has softened.

Profitably for the company's metals recycling unit is anticipated to remain steady in the third quarter on sequential comparison on the back of higher scrap selling values from some metal spread expansion and comparable shipments during the third quarter.

According to Steel Dynamics, continued robust demand for its fabricated steel joist and deck products indicates that the non-residential construction market is on growth trajectory. Given that, the company’s earnings from fabrication business is expected to be steady on the back of steady metal spread and shipments, as improved selling values are anticipated to keep pace with higher costs associated with steel inputs.

Shares of Steel Dynamics have dipped 0.2% in the last three months, underperforming the industry’s 10.2% growth.

Steel Dynamics reported net income of $154 million or 63 cents per share in second-quarter 2017, compared to net income of $142 million or 58 cents recorded a year ago. The figure missed the Zacks Consensus Estimate of 65 cents.

Net sales in the quarter increased 18.1% year over year to $2,390.7 million, beating the Zacks Consensus Estimate of $2,344 million.

Steel Dynamics continues to generate robust cash flows and strengthen financial position. The company is well poised for growth and to deliver shareholder value through strategic and organic growth opportunities.

Steel Dynamics currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked companies in the basic materials space include Sociedad Quimica y Minera S.A. (NYSE:SQM) , Koppers Holdings Inc. (NYSE:KOP) and Mondi Plc (LON:MNDI) MONDY. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Sociedad Quimica has an expected long-term earnings growth rate of 32.5%.

Koppers has an expected long-term earnings growth rate of 18%.

Mondi has an expected long-term earnings growth rate of 6%.

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