STLD

Steel Dynamics Inc

Industrial/Transportation


Presented:11/16/2016
Price:$33.35
Cap:$8.19B
Current Price:$128.46
Cap:$19.82B

Presented

Date11/16/2016
Price$33.35
Market Cap$8.19B
Ent Value$7.66B
P/E Ratio75.8x
Book Value$12.17
Div Yield0.02%
Shares O/S245.68M
Ave Daily Vol3,531,692
Short Int4.87%

Current

Price$128.46
Market Cap$19.82B
Steel Dynamics, Inc. is a diversified carbon-steel steel producer and metals recycler in the U.S. It produces a wide array of steel - beams, bars, steel sheet, and more. It operates through the following segments: Steel Operations, Metals Recycling Operations, Steel Fabrication Operations, and Others. The Steel Operations segment consist of its electric arc furnace mini-mills, producing steel from steel scrap, utilizing continuous casting, automated rolling mills, and various downstream finishing facilities. The Metals Recycling Operations segment primarily includes its metals recycling operations, liquid pig iron production facility, and Minnesota iron operations. The Steel Fabrication Operations segment includes New Millennium Building Systems plants, which fabricate steel joists, trusses, girders, and decking used within the non-residential construction industry. The company was founded by Keith E. Busse, Mark D. Millett, Richard P. Teets and John C. Bates in August 1993 and is headquartered in Fort Wayne, IN.

Publicly traded companies mentioned herein: Nucor Corporation (NUE), Severstal PJSC (SVST LI), Steel Dynamics Inc (STLD), United States Steel Corporation (X)

Highlights

The presenter is long shares of Steel Dynamics (STLD), the second largest mini-mill in the US behind Nucor. At ~$33 he sees a favorable risk/ reward setup due to valuation and his conviction that steel prices have bottomed out and are unlikely to fall because of where input costs are today (the recent spike in the price of met coal has created a cost-push). Additionally, STLD has room to expand production and the overall company is still small enough that incremental capital investments in the business move the needle on an EBITDA basis. If STLD’s EPS outperforms Street forecasts as the presenter expects in 2017 and 2018 the stock should see the high $40s within 12-18 months (16x $3 of EPS in 2018, versus the Street at $2.40/ share in 2018).

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Idea Discussion

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