Steel Dynamics, Inc. (STLD) | Investment Case

1. Company Snapshot

1.a. Company Description

Steel Dynamics, Inc., together with its subsidiaries, operates as a steel producer and metal recycler in the United States.It operates through three segments: Steel Operations, Metals Recycling Operations, and Steel Fabrication Operations.The Steel Operations segment offers hot roll, cold roll, and coated steel products; parallel flange beams and channel sections, flat bars, large unequal leg angles, and reinforcing bars, as well as standard strength carbon, intermediate alloy hardness, and premium grade rail products; and engineered special-bar-quality products, merchant-bar-quality products, and other engineered round steel bars.

The company also engages in turning, polishing, straightening, chamfering, threading, precision saw-cutting, and heat treating of bar products; and cutting to length, straightening, hole punching, shot blasting, welding, galvanizing, and coating of specialty products.Its products are used in construction, automotive, manufacturing, transportation, heavy and agriculture equipment, and pipe and tube markets.This segment sells directly to end-users, steel fabricators, and service centers.

The Metals Recycling Operations segment purchases, processes, and resells ferrous and nonferrous scrap metals into reusable forms and grades.Its ferrous products include heavy melting steel, busheling, bundled scrap, shredded scrap, steel turnings, and cast-iron products; and nonferrous products comprise aluminum, brass, copper, stainless steel, and other nonferrous metals.This segment also provides transportation logistics, marketing, brokerage, and scrap management services.

The Steel Fabrication Operations segment produces non-residential steel building components, such as steel joists, girders, trusses, and steel deck products.The company also exports its products.Steel Dynamics, Inc.

was incorporated in 1993 and is headquartered in Fort Wayne, Indiana.

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1.b. Last Insights on STLD

Steel Dynamics' recent performance was driven by strong Q3 earnings, beating estimates with $2.74 per share, up from $2.05 a year ago. Record steel shipments and margin improvement fueled the beat. The company's growth outlook is supported by higher tariffs, robust auto and data center demand, and the ramp-up of its new aluminum facility. A solid balance sheet and ongoing share buybacks, which enhance shareholder returns by reducing outstanding shares, are additional positives. (Source: Zacks Consensus Estimate)

1.c. Company Highlights

Last Price	192.74
Change Percentage	0.43%
Open	194.06
Previous Close	191.92
Market Cap ( Millions)	28147
Volume	1137256
Year High	208.47
Year Low	103.17
M A 50	177.79
M A 200	147.71

FCF Yield	1.78%
Dividend Yield	1.04%
ROE	13.31%
Debt / Equity	47.01%
Net Debt / EBIDTA	162.75%
Price To Book	3.13
Price Earnings Ratio	23.67
Price To FCF	56.12
Price To sales	1.55
EV / EBITDA	14.94

2. Steel Dynamics' Strong 2025 Performance and Optimistic Outlook

Steel Dynamics reported a robust financial and operational performance in 2025, with record annual steel shipments of 13.7 million tonnes, cash from operations of $1.4 billion, and adjusted EBITDA of $2.2 billion. In the fourth quarter, the company achieved net income of $266 million or $1.82 per diluted share, exceeding analyst estimates of $1.72, with revenue of $4.4 billion and operating income of $310 million. The company's steel operations generated operating income of $1.4 billion for the full year, driven by record steel shipments, while metals recycling operations saw a 30% increase in operating income to $97 million.

Publication Date: Feb -16

                                    📋 Highlights
                                    Record Steel Shipments:
                                                Annual steel shipments hit 13.7 million tonnes, driving $2.2B adjusted EBITDA.
Strong Liquidity:
                                                Over $2.2B in liquidity, with $1.4B cash from operations and $900M stock buyback in 2025.
Aluminum Utilization Growth:
                                                Aluminum rolling mill to reach 90% utilization by 2026, up from 75%, with $650–700M EBITDA target.
Capital Investments:
                                                Spent $948M in 2025, projecting $600M in 2026 to expand Sinton and aluminum projects.
Recycling Growth:
                                                Metals recycling operating income surged 30% to $97M, aided by scrap innovation and cost savings.

                                

Segment Performance

The steel fabrication platform reported earnings of $407 million for the full year, contributing to the company's overall strong performance. The aluminum team achieved EBITDA positivity in December, and the metals recycling operations performed well, increasing operating income by almost 30%. Steel Dynamics' steel team had a solid year with record shipments of 13.7 million tons, and the domestic steel industry operated at a 77% production utilization rate, while SDI's steel mills operated at 86%.

Growth Prospects and Capital Allocation

The company is optimistic about its growth prospects, with the aluminum business expected to reach 90% utilization by the end of 2026. Steel Dynamics has a significant domestic supply deficit of over 1.4 million tons for aluminum sheet, forecasted to grow with demand. The company's raw material platform will facilitate higher recycled content, and its aluminum team has developed new separation technologies to access more usable aluminum scrap at a lower cost. The company expects its through-cycle EBITDA for its aluminum mill to remain at $650-$700 million, plus $40-$50 million for the omni platform.

Valuation and Outlook

With a P/E Ratio of 23.54 and an EV/EBITDA of 14.87, the market appears to have priced in Steel Dynamics' strong performance and growth prospects. Analysts estimate next year's revenue growth at 3.0%. The company's dividend strategy is to keep the dividend growing as structural growth in cash flow occurs, and it will consider increasing the dividend this year or next. The company's strong capital foundation, with liquidity of over $2.2 billion, and a cash generation capability that has fundamentally changed over the last five years, positions it well for future growth.

Risk Factors and Challenges

The company's Sinton facility experienced a transformer failure in Q4, but operations resumed within 12 hours. The outages at Sinton and other facilities in the fourth quarter had a modest impact on the current quarter. The company expects working capital to fluctuate slightly throughout the year, with some pressure on working capital and cash flow in the first quarter due to profit sharing payments to employees.

3. NewsRoom

Steel Dynamics, SGH Raise BlueScope Steel Takeover Bid to $11 Billion

Feb -17

Source: wsj.com

SGH, Steel Dynamics raise buyout offer for BlueScope Steel to $10.6 billion

Feb -17

Source: reuters.com

SGH and Steel Dynamics confirm best and final A$32.35 share proposal¹ to acquire BlueScope Steel Ltd

Feb -17

Source: prnewswire.com

Steel stocks are falling as they get a taste of the ‘TACO trade'

Feb -13

Source: marketwatch.com

Canada Post Corp Registered Pension Plan Acquires 4,587 Shares of Steel Dynamics, Inc. $STLD

Feb -09

Source: defenseworld.net

Steel Dynamics, Inc. $STLD Shares Bought by Principal Financial Group Inc.

Feb -08

Source: defenseworld.net

Steel Dynamics, Inc. $STLD Shares Sold by Thrivent Financial for Lutherans

Feb -01

Source: defenseworld.net

Steel Dynamics Inc (STLD) Q4 2025 Earnings Call Highlights: Record Steel Shipments and Strong Liquidity Amid Challenges

Jan -26

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.13%)

6. Segments

Steel

Expected Growth: 1.2%

Steel Dynamics, Inc.'s 1.2% growth is driven by increasing demand from the automotive and construction industries, coupled with the company's strategic expansion into high-margin product lines, such as galvanized and coated steel. Additionally, cost savings from operational efficiencies and a favorable pricing environment contribute to the growth.

Steel Fabrication

Expected Growth: 0.8%

Steel Dynamics' fabrication segment growth is driven by increasing demand from the construction and infrastructure industries, supported by government investments in infrastructure projects. Additionally, the company's focus on value-added products and strategic acquisitions contribute to its growth, with a moderate growth rate of 0.8.

Metals Recycling

Expected Growth: 1.5%

Steel Dynamics' Metals Recycling segment growth is driven by increasing demand for recycled metals, supported by environmental regulations and sustainability initiatives. Additionally, the company's strategic acquisitions and investments in technology have improved operational efficiency, further boosting growth. Strong relationships with suppliers and customers also contribute to the segment's 1.5% growth.

Other

Expected Growth: 0.5%

Steel Dynamics' 'Other' segment growth is driven by increasing demand for its metal recycling and fabrication services, supported by a strong automotive market and rising steel prices. Additionally, the company's strategic acquisitions and expansion into new markets contribute to its growth, with a focus on value-added products and cost savings initiatives.

7. Detailed Products

Flat Roll Steel

Steel Dynamics' flat roll steel products include hot-rolled, cold-rolled, and coated steel sheets used in various applications such as automotive, construction, and consumer goods.

Long Products

Long products include beams, channels, and other structural steel products used in construction, infrastructure, and industrial applications.

Tubular Products

Tubular products include oil country tubular goods (OCTG) and line pipe used in the oil and gas industry.

Metallic-Coated Products

Metallic-coated products include galvanized, galvannealed, and electrogalvanized steel used in construction, automotive, and consumer goods.

Painted and Coated Products

Painted and coated products include pre-painted and coated steel used in construction, consumer goods, and industrial applications.

Rail Products

Rail products include railroad rails and accessories used in the railroad industry.

8. Steel Dynamics, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Steel Dynamics, Inc. faces moderate threat from substitutes due to the availability of alternative materials and products.

Bargaining Power Of Customers

The bargaining power of customers is low due to the fragmented nature of the steel industry, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of a few large suppliers of raw materials, giving them some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high capital requirements and regulatory barriers to entry in the steel industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the steel industry, leading to intense competition.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	25.86%
Debt Cost	4.46%
Equity Weight	74.14%
Equity Cost	11.31%
WACC	9.54%
Leverage	34.87%

11. Quality Control: Steel Dynamics, Inc. passed 8 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

NewMarket

A-Score: 6.9/10

Value: 4.5

Growth: 7.2

Quality: 7.2

Yield: 4.0

Momentum: 9.5

Volatility: 8.7

1-Year Total Return ->

Reliance Steel & Aluminum

A-Score: 5.3/10

Value: 4.7

Growth: 6.1

Quality: 5.6

Yield: 3.0

Momentum: 4.0

Volatility: 8.7

1-Year Total Return ->

Steel Dynamics

A-Score: 5.2/10

Value: 3.5

Growth: 7.1

Quality: 5.1

Yield: 2.0

Momentum: 7.0

Volatility: 6.3

1-Year Total Return ->

Boise Cascade

A-Score: 5.1/10

Value: 6.9

Growth: 5.8

Quality: 5.4

Yield: 6.0

Momentum: 0.5

Volatility: 6.0

1-Year Total Return ->

CMC

A-Score: 4.2/10

Value: 3.6

Growth: 3.8

Quality: 4.5

Yield: 2.0

Momentum: 5.0

Volatility: 6.3

1-Year Total Return ->

Cleveland-Cliffs

A-Score: 3.8/10

Value: 9.4

Growth: 3.0

Quality: 3.5

Yield: 0.0

Momentum: 4.5

Volatility: 2.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

22.04%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.54%

Steel Dynamics, Inc. - US8581191009

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on STLD

1.c. Company Highlights

Higher Growth

Better Quality

Less Volatile

Earnings Beats

Average Quality

Medium Volatility

Revenues Beats

Earnings Miss

Revenues Miss

Fairly Valued

Stable Momentum

Average Yield

2. Steel Dynamics' Strong 2025 Performance and Optimistic Outlook

Segment Performance

Growth Prospects and Capital Allocation

Valuation and Outlook

Risk Factors and Challenges

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.13%)

6. Segments

Steel

Expected Growth: 1.2%

Steel Fabrication

Expected Growth: 0.8%

Metals Recycling

Expected Growth: 1.5%

Other

Expected Growth: 0.5%

7. Detailed Products

Flat Roll Steel

Long Products

Tubular Products

Metallic-Coated Products

Painted and Coated Products

Rail Products

8. Steel Dynamics, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Steel Dynamics, Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

192.74$

Current Price

192.74$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA