Steel Story

STLD -- USA Stock

USD 42.07 1.79 4.08%

Macroaxis Story

Steel Dynamics is scheduled to announce its earnings today. The next earnings report is expected on the 19th of April 2021. Steel Dynamics Free Cash Flow is projected to increase significantly based on the last few years of reporting. The past year's Free Cash Flow was at 831.58 Million. The current year Invested Capital is expected to grow to about 3.1 B, whereas Revenue Per Employee is forecasted to decline to about 1.1 M. While some millenniums are indifferent towards basic materials space, it makes sense to digest Steel Dynamics as a unique investment alternative.

Published over a month ago

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Is Steel Dynamics (NASDAQ:STLD) outlook still optimistic based on the latest debt level?

The company currently holds 2.81 B in liabilities with Debt to Equity (D/E) ratio of 0.67, which is about average as compared to similar companies. On a scale of 0 to 100, Steel Dynamics holds a performance score of 9. The entity has a beta of 0.42, which indicates possible diversification benefits within a given portfolio. Let's try to break down what Steel's beta means in this case. As returns on the market increase, Steel Dynamics returns are expected to increase less than the market. However, during the bear market, the loss on holding Steel Dynamics will be expected to be smaller as well. Although it is vital to follow Steel Dynamics current price movements, it is good to be conservative about what you can do with the information regarding equity historical returns. The philosophy towards measuring future performance of any stock is to evaluate the business as a whole together with its past performance, including all available fundamental and technical indicators. By inspecting Steel Dynamics technical indicators, you can presently evaluate if the expected return of 0.37% will be sustainable into the future. Please operates Steel Dynamics jensen alpha, semi variance, day typical price, as well as the relationship between the maximum drawdown and accumulation distribution to make a quick decision on whether Steel Dynamics existing price patterns will revert.

Steel Dynamics financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Steel Dynamics, including all of Steel Dynamics's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Steel Dynamics assets, the company is considered highly leveraged. Understanding the composition and structure of overall Steel Dynamics debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it.

Please read more on our technical analysis page.

Understanding Steel Total Liabilities

Steel Dynamics liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Steel Dynamics has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Steel Dynamics balance sheet include debt obligations and money owed to different Steel Dynamics vendors, workers, and loan providers. Below is the chart of Steel short long-term liabilities accounts currently reported on its balance sheet.

You can use Steel Dynamics financial leverage analysis tool to get a better grip on understanding its financial position

How important is Steel Dynamics's Liquidity

Steel Dynamics financial leverage refers to using borrowed capital as a funding source to finance Steel Dynamics ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Steel Dynamics financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Steel Dynamics's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions.

It is good to see analyst projects for Steel Dynamics, but it might be worth checking our own buy vs. sell analysis

An Additional Perspective On Steel Dynamics

Steel Dynamics reported the previous year's revenue of 9.35 B. Net Income was 484.4 M with profit before overhead, payroll, taxes, and interest of 1.53 B.

Asset Breakdown

2.8 B

Assets Non Current

751.9 M

Goodwill

3.3 B

Current Assets

	Total Assets	6.7 Billion
	Current Assets	3.26 Billion
	Assets Non Current	2.81 Billion
	Goodwill	751.92 Million
	Tax Assets	25.29 Million

Steel Dynamics has 63 percent chance to dip below $38 in 30 days

The skewness is down to 0.5 as of today. Steel Dynamics currently demonstrates below-verage downside deviation. It has Information Ratio of 0.03 and Jensen Alpha of 0.18. However, we do advice investors to further question Steel Dynamics expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Final Take On Steel Dynamics

Although other companies within the steel industry are still a little expensive, even after the recent corrections, Steel Dynamics may offer a potential longer-term growth to shareholders. With an impartial outlook on the current market volatility, it may be better to hold off any inventment activity and neither buy nor exit any shares of Steel Dynamics at this time. The Steel Dynamics risk-reward trade off is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Steel Dynamics.

About Contributor

Ellen Johnson is a Member of Macroaxs Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in predictive investment analytics and risk management. View Profile

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Steel Dynamics. Please refer to our Terms of Use for any information regarding our disclosure principles.

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