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On Monday, Citi reaffirmed its positive stance on Steel Dynamics (NASDAQ:STLD), maintaining a Buy rating and a price target of $145.00. The research firm’s analyst, Alexander Hacking, updated the company’s model following the first quarter guidance provided by Steel Dynamics. The company’s expected earnings per share (EPS) for the first quarter have been adjusted to $1.37, a decrease from the previously estimated $1.64, aligning closely with the company’s own guidance range of $1.36 to $1.40 per share. According to InvestingPro data, three analysts have recently revised their earnings downward for the upcoming period, with the company’s next earnings report scheduled for April 22, 2025.
Looking ahead, Citi’s 2025 EBITDA forecast for Steel Dynamics has been slightly revised downward by 1%, moving from $2.3 billion to $2.2 billion. This revision takes into account an anticipated sequential improvement in the second and third quarters of the year, driven by price lags. The company’s current EBITDA stands at $2.42 billion, while maintaining a strong financial health score of "GOOD" according to InvestingPro’s comprehensive analysis, which considers multiple financial metrics and market indicators.
Steel Dynamics has projected an uptick in steel demand by 2025, attributing this expected growth to domestic manufacturing investments and federal infrastructure spending. However, Hacking notes that the recent surge in activity is primarily attributed to seasonal trends and tariff-driven restocking. He also expressed caution regarding the potential negative effects of trade policy uncertainty on future buying, excluding federal infrastructure-related demand.
Despite these concerns, Citi’s outlook for Steel Dynamics remains optimistic. The firm believes that the steel producer is well-positioned to outperform the sector. This confidence is supported by the anticipated EBITDA uplift of approximately $1 billion from the Sinton project and the company’s aluminum rolling operations, which are expected to contribute significantly to its financial performance. Trading at a P/E ratio of 12.37x and showing impressive dividend growth of 17.65% last year, InvestingPro analysis suggests the stock is currently undervalued. For deeper insights into Steel Dynamics’ valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Steel Dynamics has announced a successful completion of a $1 billion notes offering, consisting of $600 million of 5.250% Notes due in 2035 and $400 million of 5.750% Notes due in 2055. The proceeds from this transaction are intended for general corporate purposes, including the repayment of existing debt. The company’s first-quarter 2025 earnings guidance indicated an EPS range of $1.36 to $1.40, translating to an expected EBITDA of $417 million, which is below initial estimates from firms like Citi. Despite this, Steel Dynamics’ Sinton facility reported over 90% operational levels in the first quarter, with expectations of profitability in the second quarter of 2025. Wolfe Research recently upgraded Steel Dynamics’ stock rating from Underperform to Peer Perform, citing revised steel price projections following new tariffs on steel imports. KeyBanc Capital Markets maintained an Overweight rating on Steel Dynamics, highlighting operational improvements, particularly at the Sinton facility, and the company’s strong free cash flow. The company also marked a milestone in its aluminum segment with the casting of its first aluminum ingot, indicating a strategic expansion into the aluminum market. These developments signal potential growth and profitability for Steel Dynamics in the near future.
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