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How Analysts Rate Steel Dynamics after Its Q1 Earnings Miss

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May. 21 2019, Updated 3:12 p.m. ET

Steel stocks

The first-quarter earnings season is nearly over, and most steel companies have released their quarterly earnings results. Overall, it was a good quarter for steel companies in terms of earnings beats. Among the major US-based steel and iron ore players, only Steel Dynamics (STLD) missed the mark on earnings.

U.S. Steel (X), AK Steel (AKS), Nucor (NUE), and Cleveland-Cliffs (CLF) posted better-than-expected earnings.

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Steel Dynamics

Steel Dynamics reported its first-quarter earnings results on April 22. It posted revenue of $2.82 billion in the quarter compared to $2.90 billion in the fourth quarter and $2.60 billion in the first quarter of 2018. The company posted EPS of $0.91 in the quarter compared to EPS of $1.17 in the fourth quarter and $0.96 in the first quarter of 2018.

Analysts’ views

After STLD’s earnings release, JPMorgan Chase lowered its target price on the stock from $46 to $44, while Credit Suisse lowered its target price from $43 to $38. On April 30, Morgan Stanley also lowered Steel Dynamics’ target price from $42 to $39. However, on May 8, UBS upgraded Steel Dynamics from a “neutral” to a “buy” and raised its target price from $35.5 to $47. Last week, Cowen lowered Steel Dynamics’ target price by $1 to $35.

If we consider analysts’ views on Steel Dynamics stock, we’ll find that it’s received “strong buy” ratings from three analysts, while eight analysts have rated it as a “buy” or some equivalent. The remaining three analysts polled by Thomson Reuters have given the stock “hold” ratings. Steel Dynamics’ mean consensus target price of $40.5 represents a potential upside of 36.6% over its May 20 closing price.

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