Steel Dynamics, Inc. (STLD) — This leading U.S. steel producer and metals recycler is one of the most productive and profitable flat-roll mini mills in the world. The company’s low-cost structure tends to offset the cyclical nature of the building and auto industries, its primary customers.
On Jan. 25, Steel Dynamics reported fourth-quarter adjusted earnings per share (EPS) of 9 cents, beating the consensus estimate of 7 cents by 29%.
Analysts expect earnings to increase 75% this year to $1.28 per share and another 30% to $1.66 next year.
S&P Capital IQ Equity Research lauds the company for its strong balance sheet and above-average dividend. Its analysts expect EBITDA margins to expand by 250 basis points in 2016 to 11.8% and continue expanding to over 13% in 2017. They rank STLD stock a “Strong Buy” with a 12-month target of $23.
STLD stock broke a downtrend last week that had been in place since June when it topped at over $23. High volume on the break from a deep “V” through the 50-day moving average and bearish resistance line at about $17 confirms the change in trend.
On Thursday, STLD stock briefly punched through its 200-day moving average intraday. Breakouts of this type often pull back to the breakout line, so buy STLD at $17 with a trading target of $22 for a potential gain of nearly 30%, plus dividends. Steel Dynamics pays an annual dividend of $0.55 (current yield of 3%) and is expected to go ex-dividend in late March.