The catalyst is that steel prices will rebound in light of China’s winter closures and supply discipline. China may reduce steel production by about 33 million mt between mid-November and the end of March 2018, based on S&P Global Platts estimates published October 27, 2017.
Analysts have become more bullish on Steel Dynamics stock over the last few weeks. On October 24, 2017, Morgan Stanley raised their price target to $36 from $33. On October 20, 2017, Bank of America raised their price target to $45 from $44, Cowen and Co set their price target at $43, Citigroup raised their price target to $42 from $41, and KeyCorp upgraded the stock to an Overweight rating. Overall there are no Sell ratings, 5 Hold ratings, and 11 Buy ratings. The average price target is $41.53 which represents 11.56% upside.
Steel Dynamics, Inc. is a steel producing and a metal recycling company. The Company is engaged in the manufacture and sale of steel products, processing and sale of recycled ferrous and nonferrous metals, and fabrication and sale of steel joists and deck products. You can read more about the company on their website.
Steel Dynamics Stock
Steel Dynamics stock is testing the 61.8% Fibonacci retracement level while large players volume is rising. The stock also has a bullish pocket pivot signal (blue dot) on Friday, November 10, 2017. Using large players volume and pocket pivot signals is one of my favorite swing trading strategies. Here is a swing trading lesson on pocket pivots and large players volume. The Twiggs Money Flow is not as strong as we would like and is a cautionary signal.
STLD presents a decent setup pattern. Prices have been consolidating lately. A pullback is taking place, which may present a good opportunity for an entry. There is very little resistance above the current price.
Steel Dynamics Inc. Review
STLD has a Return On Assets of 7.59%. This is among the best returns in the industry. The industry average is 1.25%. STLD outperforms 93% of its industry peers. STLD's Return On Equity of 17.90% is among the best returns of the industry. STLD outperforms 87% of its industry peers. The industry average return on equity is 9.40%. STLD has a Profit Margin of 5.79%. This is better than the industry average of 1.05%. STLD has a very good Piotroski-F score of 8.00. This indicates a great health and profitability for STLD.
The low PEG Ratio, which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company. Compared to an average industry Enterprise Value to EBITDA ratio of 11.43, STLD is valued rather cheaply. With a Price/Earnings Ratio of 17.86, STLD is valued on the expensive side. STLD's Price/Earning Ratio is in line with the industry average which is at 17.86. With a Forward Price/Earnings Ratio of 12.37, STLD is fairly valued. When comparing the current price to the book value of STLD, we can conclude it is valued correctly. It is trading at 2.99 times its book value. When comparing the price book ratio of STLD to the average industry price book ratio of 1.51, STLD is valued more expensive than its industry peers. 97% of the companies listed in the same industry are valued cheaper.
STLD shows a strong growth in Earnings Per Share. In the last year, the EPS grew by 427.53%, which is very impressive! Measured over the past 5 years, STLD shows a very strong growth in Earnings Per Share. The EPS has been growing by 28.23% on average per year. The Earnings Per Share is expected to grow by 43.21% on average over the next 2 years. This is very strong growth. Looking at the last year, STLD shows a very strong growth in revenue. Revenue has grown by 22.20%. Revenue has been growing slightly by 4.56% on average over the past 5 years.
STLD has a Current Ratio of 3.35. This indicates that STLD is financially healthy and has no problem in meeting its short term obligations. When comparing the Current Ratio to an average industry Current Ratio of 2.21, STLD is better placed than the average industry peer to meet its short term obligations. The Quick Ratio of STLD is much better than the industry average of 1.16. STLD has a better rating than 86% of its industry peers. An Altman-Z score of 3.89 indicates that STLD is not in any danger for bankruptcy at the moment. STLD has one of the better Altman-Z scores in its industry. It is much better than the industry average of 2.12. STLD has a better score than 82% of its industry peers. The Piotroski-F score of STLD is 8. This is a very strong score and indicates great health and profitability for STLD. STLD has a Quick Ratio of 1.95. This is a normal value and indicates that STLD is financially healthy and should not expect problems in meeting its short term obligations. When comparing the Debt to Equity Ratio of STLD to the average industry Debt to Equity Ratio of 0.45, STLD required more debt to finance its operations than its industry peers.
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