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How Wall Street Views Steel Dynamics after Record Earnings

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Steel Dynamics

Steel Dynamics (STLD) has received a “strong buy” rating from three analysts, while eight analysts have rated it as a “buy” or some equivalent. The remaining four analysts polled by Thomson Reuters on February 6 have rated Steel Dynamics as a “hold.” The stock doesn’t have any “sell” ratings, and its mean consensus price target of $42.35 represents a potential upside of 14.6% over its February 6 closing prices.

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Fourth-quarter earnings

Steel Dynamics released its fourth-quarter earnings on January 22. It posted revenues of $2.9 billion in the fourth quarter as compared to $3.2 billion in the third quarter and $2.3 billion in the fourth quarter of 2017. Steel Dynamics’ fourth-quarter revenues fell short of analysts’ estimates. U.S. Steel (X) and AK Steel (AKS) also missed their revenue estimates.

Steel Dynamics posted adjusted EPS of $1.31 in the fourth quarter as compared to $1.69 in the sequential quarter. Steel Dynamics’ fourth-quarter earnings were better-than-expected and also topped its guidance. Last year, Steel Dynamics posted record steel shipments and fabrication shipments. The company’s revenues, EBITDA, and operating cash flows also jumped to record highs as President Trump’s tariffs lifted US steel companies’ (XME) earnings in 2018.

Analysts’ recommendations

However, even record earnings could not impress analysts. On January 23, J.P. Morgan lowered Steel Dynamics’ target price from $59 to $51. On January 28, Morgan Stanley also lowered Steel Dynamics’ target price from $52 to $42.

Like Steel Dynamics, Nucor (NUE) also posted record earnings in 2018. In the next article, we’ll see how brokerages view Nucor after its fourth-quarter earnings release.

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