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How Analysts Are Rating Steel Stocks Ahead of 4Q16 Announcements

Mohit Oberoi, CFA - Author

Aug. 18 2020, Updated 6:18 a.m. ET

Analysts’ ratings

What a year 2016 was for steel stocks (XME). U.S. Steel Corporation (X) and AK Steel (AKS) rose more than 300%. With steel companies’ 4Q16 earnings announcements just around the corner, we should look at how analysts are rating stocks.

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Steel Dynamics has most “buy” recommendations

According to consensus estimates compiled by Thomson Reuters, Steel Dynamics (STLD) has received the most “buy” ratings among the companies we are covering. Nucor (NUE) and ArcelorMittal (MT) have received 53% and 43% “buy” ratings, respectively.

In contrast, U.S. Steel and AK Steel mainly have “hold” ratings from analysts, as shown in the graph above. AK Steel has the highest proportion of “hold” ratings in our coverage of stocks, with every two out of three analysts rating the stock as a “hold.”

In terms of “sell” recommendations, Steel Dynamics stands out from other steel stocks. No analyst has rated the stock as a “sell” or equivalent. In contrast, 17% of analysts have given U.S. Steel a “sell” or equivalent rating.

Target prices

Due to the steep rally in steel stocks in November and December, most steel stocks are trading near their consensus one-year price targets. Steel Dynamics carries a consensus one-year price target of $39.53, which represents a 10.7% upside over its January 17 closing price. ArcelorMittal is trading 8.4% below its consensus price target of $8.82, and Nucor is trading 5.9% below its consensus one-year price target based on its January 17 closing price. In the next article, we’ll look at earnings estimates for AK Steel, which is scheduled to release its 4Q16 financial results on January 24.


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