Steel Dynamics may be undervalued with strong growth indicators, but the 9 analysts following the company give it an rating of hold. Their target prices range from $73.0 to $130.0 per share, for an average of $109.22. At today's price of $126.47, Steel Dynamics is trading 15.79% away from its average target price, suggesting there is an analyst belief that shares are overpriced for the stock.
Steel Dynamics, Inc., together with its subsidiaries, operates as a steel producer and metal recycler in the United States. Based in Fort Wayne, IN, the large-cap Industrials company has 12,060 full time employees. Steel Dynamics has provided a 1.4% dividend yield over the last 12 months.
Steel Dynamics has a trailing twelve month P/E ratio of 8.1, compared to an average of 22.19 for the Industrials sector. Considering its EPS guidance of $10.31, the company has a forward P/E ratio of 12.3.
The average compound growth rate of the company's historical and projected earnings per share is 9.8%. On this basis, the company's PEG ratio is 0.71. However, this growth rate is probably not sustainable. In its place we will use the broader market's estimated 5-year EPS growth rate of 8.3%, which gives us a PEG ratio of 0.84. Even with this more conservative assumption on EPS growth, the PEG ratio suggests that Steel Dynamics shares are underpriced.
Furthermore, the market is potentially undervaluing Steel Dynamics in terms of its book value because its P/B ratio is 2.32. In comparison, the sector average P/B ratio is 4.06. The company's shares are currently -19.0% below their Graham number, indicating that its shares have a margin of safety.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $11,822 | $10,465 | $9,601 | $18,409 | $22,261 | $20,804 |
| Revenue Growth | n/a | -11.48% | -8.25% | 91.73% | 20.92% | -6.55% |
| Operating Margins | 15% | 9% | 9% | 23% | 23% | 17% |
| Net Margins | 11% | 6% | 6% | 18% | 17% | 13% |
| Net Income (MM) | $1,258 | $678 | $571 | $3,247 | $3,879 | $2,679 |
| Net Interest Expense (MM) | $127 | $127 | $119 | $108 | $107 | $129 |
| Depreciation & Amort. (MM) | $317 | $321 | $326 | $348 | $384 | $428 |
| Earnings Per Share | $5.35 | $3.04 | $2.59 | $15.56 | $20.92 | $15.72 |
| EPS Growth | n/a | -43.18% | -14.8% | 500.77% | 34.45% | -24.86% |
| Diluted Shares (MM) | 235 | 221 | 212 | 207 | 185 | 129 |
| Free Cash Flow (MM) | $1,176 | $944 | -$211 | $1,198 | $3,552 | $2,312 |
| Capital Expenditures (MM) | $239 | $452 | $1,198 | $1,006 | $909 | $1,487 |
| Current Ratio | 3.96 | 4.22 | 3.38 | 3.1 | 3.76 | 3.77 |
| Total Debt (MM) | $2,377 | $2,734 | $3,190 | $3,203 | $3,157 | $3,186 |
| Net Debt / EBITDA | 0.76 | 1.03 | 1.55 | 0.42 | 0.28 | 0.37 |
