Steel Dynamics Inc (STLD, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at 105.52, Steel Dynamics Inc has witnessed a surge of 1.6% over a period, marked against a three-month change of 8.88%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Steel Dynamics Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Steel Dynamics Inc has been assigned the following ranks:
- 1. Financial strength rank: 8/10
- 2. Profitability rank: 9/10
- 3. Growth rank: 10/10
- 4. GF Value rank: 3/10
- 5. Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. GuruFocus assigned Steel Dynamics Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding Steel Dynamics Inc Business
Steel Dynamics Inc operates scrap-based steel minimills with roughly 16 million tons of annual steel production capacity. The company's segments include steel operations, metals recycling operations, and steel fabrication operations. It generates maximum revenue from the steel operations segment. With a market cap of $17.48 billion and sales of $20.45 billion, Steel Dynamics Inc has an operating margin of 18.96%.
Financial Strength Breakdown
According to the Financial Strength rating, Steel Dynamics Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Steel Dynamics Inc stands impressively at 41.94, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 5.75, Steel Dynamics Inc exhibits a strong defense against financial distress. With a favorable Debt-to-Revenue ratio of 0.15, Steel Dynamics Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Steel Dynamics Inc's impressive standing among its peers in generating profit. Steel Dynamics Inc Operating Margin has increased over the past five years, as shown by the following data: 2018: 14.57; 2019: 9.43; 2020: 9.03; 2021: 23.36; 2022: 22.87. Furthermore, Steel Dynamics Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2018: 19.65; 2019: 14.63; 2020: 14.94; 2021: 29.13; 2022: 27.48. This trend underscores the company's growing proficiency in transforming revenue into profit.
Growth Rank Breakdown
Ranked highly in Growth, Steel Dynamics Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 36.5%, which outperforms better than 91.6% of 583 companies in the Steel industry. Moreover, Steel Dynamics Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 70.6, and the rate over the past five years is 36.9. This trend accentuates the company's continued capability to drive growth.
Next Steps
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights Steel Dynamics Inc's unparalleled position for potential outperformance. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
