Steel Dynamics Inc. Faces Lower Earnings Expectations

Steel Dynamics Inc. has projected third quarter 2024 earnings between $1.94 and $1.98 per share, which is below analyst expectations. This decline reflects decreased profitability in the steel operations, impacting stock performance ahead of its earnings release.

Date: 17-09-2024

AI Rating: 4

Steel Dynamics Inc. (STLD) has announced its expectation for third quarter 2024 earnings to fall between $1.94 and $1.98 per share. This is notably below the consensus estimate of $2.10 per share from analysts, indicating a potential disappointment in earnings quality. The previous quarter's earnings were reported at $2.72 per share, and the third quarter of the previous year had earnings of $3.47 per share, highlighting a significant decrease year-over-year.

The company's steel operations are expected to experience a meaningful drop in profitability compared to the second quarter due to lower average realized pricing. It’s highlighted that approximately 80 percent of this business is contractually based and tied to lagging pricing indices, which suggests that as prices decline, margin pressure will affect overall profitability in the short term. The projected decline in earnings from steel operations is a warning signal for investors looking for stability and growth in this sector.

Additionally, while earnings from metals recycling operations are expected to remain steady, the projections indicate that pricing has slightly lowered, with results comparable to second quarter earnings. Meanwhile, earnings from steel fabrication operations are also anticipated to decline moderately, based upon a slight decrease in pricing.

Stocks: STLD