Recent Posts
Steel Dynamics (STLD): Raising Estimates Following The Release of Favorable Mid-Quarter Guidance
We adjusted our Steel Dynamics (STLD) model to better align with the favorable mid-quarter earnings update issued late last week. Our updated 4QE and CY20 EPS forecasts are now $0.80 and $2.57, respectively (+$0.18), supported by more aggressive profit assumptions across the Steel Mill and Metals Recycling segments. Continue reading
Steeling The Signals: December Update
Broad-based indications of strength are evident throughout the steel channels and there appears to be increasing probability of upward movement in spot market prices (looking out 3-4 quarters). The contact narrative shifted to the unusual carbon sheet and plate supply constraints, heading into a normally seasonal-slow demand period, and future production deficit anxieties.
Nucor Corporation (NUE) issued earnings outlook that may be considered disappointing by The Street. Management provided a 4Q20 EPS guidance range of $1.02-1.07. The language within this morning’s release regarding Steel Mill trends aligns with the feedback collected from our checks. We also heard from Steel Dynamics (STLD) today, which issued an adjusted 4Q20 guidance range of $0.80-0.84, beating expectations. Continue reading
Steel Dynamics (STLD): The Opposite of SteelMageddon – Raising Estimates and Target Price
What is the opposite of Steelmageddon? Whatever word just popped into your head is probably the best way to describe current domestic steel industry fundamentals. Following a closer look at the drivers behind the carbon flat rolled markets, and communicating with several channel contacts, we decided to increase our carbon sheet price forecasts and the estimates on STLD. Continue reading
Steel Dynamics (STLD): Carbon Sheet Pricing Keeps Moving Higher – 4Q Looking Even Better For The Mini-Mills
We are increasing estimates on Steel Dynamics (STLD) to reflect the continued pricing strength within the carbon steel markets, which may push 3Q earnings above the high-point of management’s previously-issued guidance range of $0.46-0.50 and drive Street expectations on 4Q20. Continue reading
Steel Dynamics (STLD): The Company Sets A Higher-Than-Expected 3Q20 Earnings Bar
We were expecting Steel Dynamics (STLD) to issue a solid mid-quarter update and the company delivered. Management offered a 3Q20 earnings guidance range of $0.46-0.50/share, which compared to the consensus forecasts of $0.41. Continue reading
Steel Dynamics (STLD): Raising Estimates On Carbon Sheet Price Strength
We are raising estimates on Steel Dynamics (STLD) to align with a rapidly rising carbon steel price environment and potential market share gains. The domestic mills were able to push the spot quote on hot rolled coil up to $520-530/ton for September deliveries, capitalizing on: relative demand strength; the undersupplied situation; and customer hedging. Continue reading
Steel: Pending Scrap Price Change + Supply Constraints * Price Increases = Trading Opportunity
We are calling a bottom and a carbon steel market inflection (and pricing). This is the main driver behind today’s positive trading call on the steel coverage group: Upgrades of Steel Dynamics (STLD) and Nucor Corporation (NUE) and a higher target price applied to Reliance Steel & Alum (RS). Continue reading
Steel Dynamics (STLD): Price Increases Seem Inevitable; But How Much Is Baked Into Estimates
Carbon steel demand and mill pricing looks to be approaching a real point of recovery, albeit from a lower-than-expected starting point. Our mid-quarter checks across the entire space recently confirmed that our contacts are expecting a slow/steady improvement in market fundamentals, and there is early channel optimism Continue reading
Steel: Demand Strength Justifies Increase Attempt, But Supply Is Coming – Oh Dear…Born
There appears to be early support for the latest mill price increase attempt on carbon sheet. After reviewing some of the signals coming out of the steel channel this week, we expect at least one-half of the attempted +$40/ton spot adjustment to stick. For the first time since January, our survey is showing a real demand push, in addition to the modest customer sourcing panic developing in the MW region. Continue reading
Steel Dynamics (STLD): Sometimes Mixed Is Good – Upgrading The Shares To A Hold
We are upgrading the shares of Steel Dynamics (STLD) to a HOLD rating as the shares have surpassed our previously-issued twelve-month target price of $27, falling 16% since the early-June downgrade (to underperform). The aggressive trading reaction to carbon scrap price headlines released earlier in the week could be the “final shoe to drop” in the metals & mining space. Continue reading
Steel Dynamics (STLD): A Dynamics In The Rust? Starting Coverage With An OUTPERFORM
Steel Dynamics (STLD) looks interesting at the current price level. In a world where almost everything can be described as weak, distressed, hitting new lows, unprecedented, or uber-bearish, we point to one of the most frequently-overlooked industrial companies in North America, distinctly advantaged versus its peers and protected by its balance sheet, in our view. Today, we are initiating coverage on the shares of STLD with an OUTPERFORM recommendation and a twelve-month target price of $28/share, staying focused on the compelling risk-versus-reward profile, long-term market share opportunities, near-term pricing tailwinds, and projected CapEx ROIs. Continue reading