On Thursday, Citi reaffirmed its Buy rating on Steel Dynamics (NASDAQ:STLD), maintaining a price target of $160.00. Following the company's third-quarter earnings release, the firm noted that Steel Dynamics' earnings per share (EPS) came in at $2.06, surpassing the late-quarter guidance range of $1.94 to $1.98. The company's adjusted EBITDA for the quarter was reported at $557 million, which is a 3% increase over Citi's projection of $539 million.
The analysis showed that the earnings beat was due to adjustments, with Mill results slightly under expectations, Fabrication performance in line with forecasts, and Mill shipments remaining stable at 3.1 million tons. This represented a 1% decrease quarter over quarter and a 1% increase year over year. However, EBITDA per ton saw a decline to $121 compared to $176 in the previous quarter, marking the lowest level since the fourth quarter of 2022, primarily due to lower sheet prices.
Steel Dynamics' Fabrication segment delivered expected results, with prices at $2,836 per ton, which is a 5% decrease from the previous quarter and a 28% drop compared to the same period last year. Shipments in this segment were steady quarter over quarter and saw a slight 2% decline year over year.
The company's free cash flow remained positive, and it continued to repurchase shares, buying back $310 million worth, or 1.6% of its stock. The outlook provided by Steel Dynamics for 2025 was described as constructive, and the firm anticipates the stock to perform in line with the market. The upcoming earnings call is expected to concentrate on market dynamics, developments at the Sinton facility, and the company's investment in aluminum.
In other recent news, Steel Dynamics reported its third-quarter results, outperforming analyst estimates. The steel producer posted adjusted earnings of $2.05 per share, a figure higher than the predicted $1.97 per share. Revenue was also robust, coming in at $4.3 billion, surpassing expectations of $4.18 billion. Despite these positive figures, net income for the quarter was down year-over-year, with the company attributing the decline to lower average realized steel pricing.
In terms of operations, Steel Dynamics reported adjusted EBITDA of $557 million and cash flow from operations of $760 million. Steel shipments for the quarter totaled 3.2 million tons, while the average external product selling price for steel operations decreased $79 sequentially to $1,059 per ton.
The company also repurchased $310 million of its common stock, representing 1.6% of outstanding shares. Looking forward, CEO Mark D. Millett expressed optimism about 2025 market dynamics, citing expectations for steel pricing recovery amid anticipated lower interest rates and continuing onshoring of manufacturing businesses. Steel Dynamics maintained a strong liquidity position of $3.1 billion as of the end of the quarter.
InvestingPro Insights
Steel Dynamics' (NASDAQ:STLD) recent performance and outlook align with several key metrics and insights from InvestingPro. The company's P/E ratio of 10.3 and adjusted P/E ratio of 9.95 for the last twelve months as of Q2 2024 suggest that the stock may be undervalued relative to its earnings, supporting Citi's Buy rating. This valuation perspective is further reinforced by InvestingPro's fair value estimate of $144.89, which is higher than the current stock price.
InvestingPro Tips highlight that Steel Dynamics has been aggressively buying back shares, which is consistent with the article's mention of $310 million in share repurchases. Additionally, the company has maintained dividend payments for 21 consecutive years and has raised its dividend for 11 consecutive years, demonstrating a strong commitment to shareholder returns. This is particularly noteworthy given the cyclical nature of the steel industry.
The company's financial health appears robust, with InvestingPro Data showing that liquid assets exceed short-term obligations and the company operates with a moderate level of debt. This financial stability supports Steel Dynamics' ability to navigate market fluctuations and continue its shareholder-friendly policies.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for Steel Dynamics, providing a deeper understanding of the company's financial position and market performance.
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