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4Q15 Earnings Preview: What Analysts Expect from Steel Dynamics

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4Q15 earnings preview

Steel Dynamics (STLD) is expected to release its 4Q15 earnings on January 25 after the markets close. According to the data compiled by Bloomberg, analysts expect Steel Dynamics to deliver EPS (earnings per share) of $0.066 per share.

This is toward the upper end of Steel Dynamics’ guidance. In its 4Q15 guidance, Steel Dynamics noted that it expects to post an EPS of $0.03–$0.07 in the quarter.

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Price movements

Steel Dynamics’ actual earnings have not diverged much from its consensus estimates, as can be seen in the graph above. Also, the stock generally does not see wild price movements after the earnings release. Nucor (NUE) is another steel company that does not witness big swings after the earnings release.

Nucor (NUE) is another steel company that does not witness big swings after the earnings release. However, U.S. Steel Corporation (X) and AK Steel (AKS) tend to be quite volatile in the earnings season. We’ll discuss U.S. Steel Corporation and AK Steel later in the series. First, let’s explore what should you look for in Steel Dynamics’ 4Q15 earnings report.

What to watch

Steel Dynamics (STLD) reduced its spot sales in the quarter, citing depressed pricing. Not many steel companies found it profitable to sell steel in the spot market, as spot HRC (hot-rolled coil) prices fell below $400 per short ton in 4Q15. Fewer spot steel shipments would lead to lower revenues for Steel Dynamics in 4Q15. In the next part of this series, we’ll see how fewer shipments could impact Steel Dynamics’ 4Q15 earnings.

You can also consider the SPDR S&P Global Natural Resources ETF (GNR) to get diversified exposure to international natural resources companies. Almost a quarter of GNR’s holdings are invested in steel and other metal companies.

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