Steel Dynamics Inc (STLD) stock analysis

P/E above its 5-year median

Steel Dynamics's P/E of 17.6 is above its own 5-year median of 9.0.

P/E below the industry

Steel Dynamics's P/E of 17.6 is below the Steel Works, Blast Furnaces, and Rolling and Finishing Mills median of 17.9.

EV/EBITDA above its 5-year median

Steel Dynamics's EV/EBITDA of 11.5 is above its 5-year median of 6.2.

P/B above the industry

Steel Dynamics's price-to-book of 3.45 is above the Steel Works, Blast Furnaces, and Rolling and Finishing Mills median of 1.75.

Trading above fair value

The share price of $238.99 is above our fair value estimate of $165.81.

Margin of safety under 20%

The price is 44.1% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -6.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -27.4% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing faster than the industry

Revenue grew 26.0% over the last twelve months; the Steel Works, Blast Furnaces, and Rolling and Finishing Mills median is 9.8%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin improving

Gross margin was 15.9% over the last twelve months, against 13.1% a year earlier.

Return on equity over 15%

Return on equity was 20.8% over the last twelve months and averaged 34.6% over five years.

Return on capital over 10%

Return on invested capital was 16.0%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Steel Dynamics's return on equity of 20.8% is above the Steel Works, Blast Furnaces, and Rolling and Finishing Mills median of 3.6%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin below its 5-year average

Net margin was 8.8% over the last twelve months, against a 5-year average of 12.6%.

Net margin above the industry

Steel Dynamics's net margin of 8.8% is above the Steel Works, Blast Furnaces, and Rolling and Finishing Mills median of 4.0%.

High debt

Debt is 42.7% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 71.4% five years ago to 42.7%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 40.3% of total debt.

Interest well covered

Operating income covers interest expense 18.4 times.

Short-term assets cover short-term debts

Current assets are 3.14 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 5.96; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Steel Dynamics paid dividends worth 0.9% of the share price over the last twelve months.

Yield below Treasuries

The 0.9% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Steel Dynamics yields 0.9%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 15.2% of net income.

Covered by free cash flow

Dividends take 27.2% of free cash flow.