Steel Dynamics Declares $450M Share Repurchase Program

Steel Dynamics, Inc. (NASDAQ:STLD) declared that its board has authorized a share repurchase program of up to $450 million of the company's common stock. The authorization, which is effective immediately, reflects the company and the board’s confidence in its ability to generate strong free cash flows amid a challenging market environment. The company’s board has canceled the previously authorized program.

Steel Dynamics remains committed to providing value to its shareholders by first focusing on profitable organic and strategic growth opportunities. Additionally, the company’s strong balance sheet and continued free cash flow generation, enable it to return value to its shareholders through the use of the share repurchase program.

Steel Dynamics last month provided third-quarter 2016 earnings guidance. The company expects earnings to be in the band of 63–67 cents per share for the quarter, compared with 58 cents per share in the prior quarter and 25 cents in the year-ago quarter.

The company anticipates profitability from its steel operations to grow due to significant metal spread expansion in the third quarter compared with the prior quarter. It projects average quarterly realized steel product pricing to increase more than additional costs derived from higher priced ferrous scrap utilized in the quarter. However, lower steel shipments across the platform are expected to neutralize some of the favorable margin impact.

The improvement in company’s earnings is expected to be driven by the its flat roll operations. While the automotive sector remains strong and the construction market is witnessing gradual improvement, demands from heavy equipment, agricultural and energy sectors remain challenging.

Steel Dynamics currently carries a Zacks Rank #4 (Sell).

Some better-ranked companies in the steel space include AK Steel Holding Corporation (NYSE:AKS) , ArcelorMittal (NYSE:MT) and POSCO (NYSE:PKX) .
AK Steel has an expected earnings growth of around 194.1% for the current year. The company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

ArcelorMittal has an expected earnings growth of around 350% for the current year and has a Zacks Rank #2.

POSCO has an expected earnings growth of around 852.4% for the current year and carries a Zacks Rank #2.

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