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 $136.93, Steel Dynamics Inc has witnessed a daily gain of 3.61%, marked against a three-month change of 9.7%. A thorough analysis, underlined by the GF Score, 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.
- Financial strength rank: 8/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 3/10
- Momentum rank: 8/10
Steel Dynamics Inc has been assigned a GF Score of 92 out of 100, which signals the highest outperformance potential. This score reflects the company's strong financial strength, impressive profitability, and exceptional growth, although its GF Value rank is a bit lower in comparison.
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, steel fabrication operations, and aluminum operations. With a market cap of $21.66 billion and sales of $18.79 billion, Steel Dynamics Inc generates the majority of its revenue from the steel operations segment, boasting an operating margin of 18.21%. This diversified business model has positioned the company as a significant player in the steel industry.
Financial Strength Breakdown
Steel Dynamics Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The company's Interest Coverage ratio stands impressively at 44.76, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 5.69, Steel Dynamics Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. The favorable Debt-to-Revenue ratio of 0.16 solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank of Steel Dynamics Inc is impressive, with an Operating Margin that has increased to 18.21% in 2023 from 10.18% in 2019. The company's Gross Margin has also seen a consistent rise over the past five years, indicating growing efficiency in revenue conversion to profit. Steel Dynamics Inc's Predictability Rank of 3.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Steel Dynamics Inc's high Growth Rank demonstrates its commitment to business expansion. The company's 3-Year Revenue Growth Rate of 35.4% outperforms 91.03% of companies in the Steel industry. The robust increase in EBITDA over the past few years, with a three-year growth rate of 61.4, accentuates the company's capability to drive growth.
Conclusion: A Strong Investment Prospect
Considering Steel Dynamics Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking companies with strong financial foundations, consistent profitability, and impressive growth trajectories will find Steel Dynamics Inc an attractive option. For those looking to discover more companies with similar strengths, GuruFocus Premium members can utilize the GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
