S&P 500   4,071.70
DOW   34,429.88
QQQ   292.55
Get Rid of Your Siri Remote Once and for All This Year
Market Wizard who made $95 million for his clients in 2008 – and predicted the 2022 collapse (Ad)
Estonia to buy US rocket artillery system in $200M deal
Russia rejects $60-a-barrel cap on its oil, warns of cutoffs
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Moldova signs new energy deal that could ease blackout risk
OPEC+ oil producers face uncertainty over Russian sanctions
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Tennessee roads plan mulls toll lanes, electric car fee hike
No OPEC+ oil shakeup as Russian price cap stirs uncertainty
S&P 500   4,071.70
DOW   34,429.88
QQQ   292.55
Get Rid of Your Siri Remote Once and for All This Year
Market Wizard who made $95 million for his clients in 2008 – and predicted the 2022 collapse (Ad)
Estonia to buy US rocket artillery system in $200M deal
Russia rejects $60-a-barrel cap on its oil, warns of cutoffs
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Moldova signs new energy deal that could ease blackout risk
OPEC+ oil producers face uncertainty over Russian sanctions
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Tennessee roads plan mulls toll lanes, electric car fee hike
No OPEC+ oil shakeup as Russian price cap stirs uncertainty
S&P 500   4,071.70
DOW   34,429.88
QQQ   292.55
Get Rid of Your Siri Remote Once and for All This Year
Market Wizard who made $95 million for his clients in 2008 – and predicted the 2022 collapse (Ad)
Estonia to buy US rocket artillery system in $200M deal
Russia rejects $60-a-barrel cap on its oil, warns of cutoffs
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Moldova signs new energy deal that could ease blackout risk
OPEC+ oil producers face uncertainty over Russian sanctions
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Tennessee roads plan mulls toll lanes, electric car fee hike
No OPEC+ oil shakeup as Russian price cap stirs uncertainty
S&P 500   4,071.70
DOW   34,429.88
QQQ   292.55
Get Rid of Your Siri Remote Once and for All This Year
Market Wizard who made $95 million for his clients in 2008 – and predicted the 2022 collapse (Ad)
Estonia to buy US rocket artillery system in $200M deal
Russia rejects $60-a-barrel cap on its oil, warns of cutoffs
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Moldova signs new energy deal that could ease blackout risk
OPEC+ oil producers face uncertainty over Russian sanctions
The One Ticker Retirement Plan Over the Shoulder Demo Now Available (Ad)
Tennessee roads plan mulls toll lanes, electric car fee hike
No OPEC+ oil shakeup as Russian price cap stirs uncertainty

Put Steel In Your Portfolio With Steel Dynamics 

Put Steel In Your Portfolio With Steel Dynamics 

Steel Dynamics Posts Record Quarter And Favorable Guidance 

If you want to put some steel in your portfolio look no further than Steel Dynamics (NASDAQ: STLD). The company is engaged in the recycling, processing, fabrication, and sales of steel to the construction and industrial complex and just posted a record quarter. The record results, as good as they are, aren’t the whole story either. The stock, like its competitors, is trading at historically low valuations that make it a deep value compared to the broad market and one that pays a healthy 1.8% dividend. While it is possible to find higher-yielding stocks that offer comparable if not equal value few are as safe and healthy as Steel Dynamics’. The company is paying out a mere 5.5% of the earnings outlook, an outlook that was just put to shame, and the outlook for distribution growth is robust. The company has been increasing the payout for the last 12 consecutive years and at a 15% CAGR that we see extending to a 13th and 14th year in calendar 2022 and 2023. 

Steel Dynamics Is Fundamentally Sound 

Steel Dynamics had a fantastic quarter supported by expansion, volume, and pricing. The company reported $6.21 billion in net revenue for a gain of 38.9% on top of last year’s 113% gain and more than double the pre-pandemic comparison. The revenue also beat the Marketbeat.com consensus estimate by 475 basis points and we see similar strength unfolding in the current and following quarters. In terms of steel and steel production, the company reports a record 3.1 million tons of total steel shipments and a record 218,000 tons of fabricated steel. The only bad news is the average selling price for steel fell slightly but that was offset by leveraged gains versus fixed costs and internal efficiencies that led to wider gross and operating margins. 


Moving down to the income, the company’s gross margin improved by 340 basis points and the operating margin by 460 basis points to drive record results for operating income, net income, and cash flow. On the bottom line, the $6.44 in GAAP and $6.73 in adjusted earnings are nearly double the levels set last year and margins may even improve in the coming quarters. The company did not give any formal guidance for revenue or earnings but says the backlog remains near record levels, new orders are strong, and demand for fabricated steel products has upward pressure on the forward pricing. To paraphrase company execs, we expect to see this momentum carry into 2023 at least. 

"Customer order entry activity continues to be healthy across all of our businesses, conflicting with the more pessimistic emotion in the marketplace," said CEO Mark D. Millett. "Despite softening flat roll steel pricing, our steel order activity remains solid from the automotive, construction, and industrial sectors, with energy continuing to improve. Our steel fabrication operations order backlog remains at near-record volumes and forward pricing levels. This combined with continued healthy order activity and broad customer optimism, supports strong overall demand dynamics for the construction industry.

The Technical Outlook: Steel Dynamics Rebounds From Bottom 

The price action in Steel Dynamics hit a bottom a few weeks before the Q2 results were released and now the stock is in rebound mode. The price action is up nearly 3.0% in premarket action and has the market above the short-term EMA if only barely. Assuming the market follows through on this move we see the stock advancing to the $75 level before hitting major resistance and then drifting up toward the consensus target of $91, a consensus target that has been moving higher over the past 12, 3, and 1-month periods. 

Put Steel In Your Portfolio With Steel Dynamics 

Should you invest $1,000 in Steel Dynamics right now?

Before you consider Steel Dynamics, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Steel Dynamics wasn't on the list.

While Steel Dynamics currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Steel Dynamics (STLD)
2.1284 of 5 stars
$109.55+4.2%1.24%4.83Hold$94.14
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

Contributing Author: Technical and Fundamental Analysis

Thomas got his start with the markets while working as a Chef. In 2005 a chance invitation to attend the seminar “How To Buy And Sell Your Own Stocks” altered his worldview. Soon trading and stocks consumed his every waking moment to the point of excluding all else. Thomas now enjoys a much different lifestyle engaged in his true passion, uncovering great investments.
Contact Thomas Hughes via email at tmhughes.writeon@gmail.com.