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	165.22
Change Percentage	-1.72%
Open	168.2
Previous Close	168.11
Market Cap ( Millions)	24129
Volume	1394045
Year High	172.94
Year Low	103.17
M A 50	153.16
M A 200	134.96

FCF Yield	1.29%
Dividend Yield	1.19%
ROE	12.65%
Debt / Equity	42.05%
Net Debt / EBIDTA	149.51%
Price To Book	2.7
Price Earnings Ratio	21.55
Price To FCF	77.59
Price To sales	1.37
EV / EBITDA	13.47

2. Steel Dynamics' Q3 2025 Earnings: A Strong Performance

Steel Dynamics reported a robust third quarter in 2025, with earnings per diluted share of $2.74, beating analyst estimates of $2.66. Revenues reached $4.8 billion, driven by record steel shipments of 3,600,000 tons, while operating income was $508 million, higher than the second quarter. Adjusted EBITDA was $664 million, indicating a strong margin profile. The company's steel operations generated operating income of $498 million, up 30% sequentially, and the metals recycling segment achieved operating income of $32 million, significantly above the sequential second quarter.

Publication Date: Oct -21

                                    📋 Highlights
                                    Record Steel Shipments:
                                                Steel shipments hit 3.6 million tons, driving $508 million operating income (+30% sequential) in core operations.
Strong Cash Flow & Share Repurchases:
                                                $723 million cash flow from operations, $661 million stock buybacks (3.4% of shares), and $2.2 billion liquidity.
Capital Allocation & Growth Projects:
                                                $200M–$600M capex for 2025–2026, with $1.4B+ through-cycle EBITDA potential from Sinton and Sinton value-add lines.
Aluminum Expansion Progress:
                                                Aluminum project on track for Q4 2025 EBITDA breakeven, with $1.4B through-cycle EBITDA capability and high-margin product approvals.
Cost & Market Advantages:
                                                Scrap costs fell $27, and flat rolled sheet deficit in the U.S. supports pricing, coupled with decarbonization-driven competitive edge.

                                

Operational Highlights

The company achieved several operational milestones, including a record quarter for shipments at its Sinton mill and progress in commissioning and ramping operations at its Lilleham team. The Biocarbon team shipped its first product in September, marking a pivotal step in the company's decarbonization journey. The aluminum rolling mill's accelerated qualifications will help commercial activities, and the company is negotiating longer-term contracts in can sheet and automotive.

Cash Flow and Capital Allocation

Steel Dynamics generated strong cash flow from operations of $723 million, with liquidity of over $2.2 billion. The company repurchased $661 million of its common stock, or 3.4% of its outstanding shares, and $1 billion remained available for share repurchases. Capital investments are expected to be in the range of $200 million for 2025 and $500 million to $600 million for 2026, indicating a disciplined investment approach.

Growth Prospects and Valuation

The company is optimistic about its growth projects, including its aluminum operations, which are expected to achieve monthly EBITDA breakeven or better in the fourth quarter of 2025. With a P/E Ratio of 20.06 and an EV/EBITDA of 12.73, the market is pricing in a certain level of growth. Analysts estimate next year's revenue growth at 8.6%, which may justify the current valuation. The company's commitment to performance, customer relationships, and safety is evident, and its culture and business model continue to differentiate its performance.

Outlook and Conclusion

The company expects to be EBITDA breakeven to positive in the fourth quarter, and its free cash flow outlook is strong. The effective tax rate is expected to be around 23%, with cash taxes modeled at 8-9% for 2025 and 15-16% for 2026. With a strong team in place and a focus on decarbonization, Steel Dynamics is well-positioned for future growth, and its bio-carbon joint venture with Aimmune will offer lower-carbon products, potentially opening doors for market share, especially in OEMs.

3. NewsRoom

Steel Dynamics (STLD) Stock Drops Despite Market Gains: Important Facts to Note

Dec -04

Source:

Steel Dynamics Secures Complete Ownership of New Process Steel

Dec -02

Source: zacks.com

Steel Dynamics Completes Acquisition of the Remaining 55% Ownership Interest in New Process Steel

Dec -01

Source: prnewswire.com

Steel Dynamics Announces Completion of Notes Offering and Redemption Call for its 5.000% Notes Due 2026

Nov -21

Source: prnewswire.com

AE Wealth Management LLC Has $452,000 Stock Holdings in Steel Dynamics, Inc. $STLD

Nov -15

Source: defenseworld.net

Allworth Financial LP Increases Position in Steel Dynamics, Inc. $STLD

Nov -14

Source: defenseworld.net

Steel Dynamics Announces Leadership Appointment

Nov -11

Source: prnewswire.com

Steel Dynamics Announces Fourth Quarter 2025 Cash Dividend

Nov -07

Source: prnewswire.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: 6.7/10

Value: 4.5

Growth: 7.2

Quality: 7.2

Yield: 3.0

Momentum: 9.5

Volatility: 8.7

1-Year Total Return ->

Reliance Steel & Aluminum

A-Score: 5.3/10

Value: 4.6

Growth: 6.1

Quality: 5.6

Yield: 3.0

Momentum: 4.0

Volatility: 8.7

1-Year Total Return ->

Boise Cascade

A-Score: 5.1/10

Value: 6.8

Growth: 5.8

Quality: 5.6

Yield: 6.0

Momentum: 0.5

Volatility: 6.0

1-Year Total Return ->

Steel Dynamics

A-Score: 4.9/10

Value: 3.4

Growth: 7.1

Quality: 5.1

Yield: 2.0

Momentum: 6.0

Volatility: 6.0

1-Year Total Return ->

CMC

A-Score: 4.4/10

Value: 3.9

Growth: 3.8

Quality: 4.5

Yield: 2.0

Momentum: 6.0

Volatility: 6.3

1-Year Total Return ->

Cleveland-Cliffs

A-Score: 3.6/10

Value: 9.2

Growth: 3.1

Quality: 3.5

Yield: 0.0

Momentum: 4.0

Volatility: 2.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

37.67%

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' Q3 2025 Earnings: A Strong Performance

Operational Highlights

Cash Flow and Capital Allocation

Growth Prospects and Valuation

Outlook and Conclusion

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

165.22$

Current Price

165.22$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA