Steel Dynamics, a leading steel producer and metals recycler, has announced its earnings guidance for the second quarter of 2024. The company expects earnings to be in the range of $2.64 to $2.68 per diluted share, a significant decrease compared to the sequential first quarter 2024 earnings of $3.67 per diluted share and the prior year second quarter earnings of $4.81 per diluted share.
The company attributes the expected decline in profitability from its steel operations to lower realized pricing, which is offsetting steady shipments. Despite the weakening scrap price environment, which has led to steel buying hesitancy, the underlying domestic steel demand remains intact. The automotive, non-residential construction, energy, and industrial sectors continue to be the primary drivers of demand.
On a positive note, Steel Dynamics anticipates higher earnings from its metals recycling operations in the second quarter of 2024 compared to the sequential first quarter results. This improvement is based on stronger volumes in both ferrous and nonferrous materials.
The company's steel fabrication operations are expected to deliver earnings in line with the sequential first quarter results, as increased shipments offset incrementally lower realized pricing. The non-residential construction sector remains solid, as evidenced by the steel joist and deck order backlog volume extending into the fourth quarter of 2024, with historically strong associated product pricing. Furthermore, the ongoing onshoring of manufacturing, coupled with the robust U.S. infrastructure program and industrial buildouts, is expected to support strong demand in the coming years.
Despite the expected decline in earnings, Steel Dynamics remains confident in its overall earnings outlook and cash flow generation. As a result, the company repurchased $247 million, or 1.1%, of its common stock during the second quarter through June 10, 2024.
NASDAQ/GS: STLD
Current Price: $98.75
Change: + 2.50 (2.60%)
Steel Dynamics' stock is currently in an uptrend, trading above its 50-day and 200-day moving averages. The stock has been making higher highs and higher lows, indicating a strong bullish sentiment in the market. The MACD (Moving Average Convergence Divergence) indicator is showing a positive crossover, with the MACD line above the signal line, confirming the bullish momentum. The RSI (Relative Strength Index) is at 68, suggesting that the stock is approaching overbought levels but still has room for further upside. The stock has recently broken through a key resistance level at $95.00, which now acts as a strong support level. Fibonacci retracement levels indicate that the stock may face resistance at $102.50 (38.2% retracement) and $105.00 (50% retracement) in the near term. The Bollinger Bands are expanding, with the stock price trading near the upper band, indicating increased volatility and the potential for further upward movement. However, traders should be cautious of a possible pullback if the stock fails to sustain its momentum above the $102.50 resistance level. Overall, the technical analysis suggests a positive outlook for Steel Dynamics' stock, with a strong uptrend and bullish indicators. Investors should monitor key support and resistance levels and watch for any signs of a trend reversal.
