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 $124.52, Steel Dynamics Inc has witnessed a daily gain of 4.52%, marked against a three-month change of 26.65%. 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: 10/10
Steel Dynamics Inc boasts a high GF Score of 92 out of 100, indicating a strong potential for outperformance. While the GF Value rank is relatively low, the company excels in financial strength, profitability, growth, and momentum, which are critical factors for long-term success.
Understanding Steel Dynamics Inc Business
Steel Dynamics Inc, with a market cap of $20.15 billion and sales of $19.39 billion, 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, with the steel operations segment generating the majority of revenue. With an operating margin of 19.06%, Steel Dynamics Inc's business model has proven to be highly efficient and profitable.
Financial Strength Breakdown
Steel Dynamics Inc's Financial Strength rating is a testament to its solid balance sheet and prudent capital management. The company's Interest Coverage ratio of 43.2 is particularly impressive, far exceeding the benchmark set by Benjamin Graham. Additionally, an Altman Z-Score of 5.73 indicates a low probability of financial distress. The strategic debt management is reflected in a Debt-to-Revenue ratio of 0.16, further solidifying the company's financial health.
Profitability Rank Breakdown
Steel Dynamics Inc's Profitability Rank is impressive, with an Operating Margin that has consistently increased over the past five years, reaching 29.07% in 2023. The company's Gross Margin has also shown a steady rise, indicating an enhanced ability to convert sales into profits. These trends highlight Steel Dynamics Inc's growing efficiency and profitability.
Growth Rank Breakdown
Steel Dynamics Inc's high Growth Rank reflects its commitment to business expansion. The company's 3-Year Revenue Growth Rate of 36.5% outperforms 91.68% of its peers in the Steel industry. The significant growth in EBITDA over the past few years, with a three-year growth rate of 70.6 and a five-year rate of 36.9, underscores Steel Dynamics Inc's ability to drive growth and profitability.
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 looking for companies with similar robust financial indicators can explore more options using the GF Score Screen. With its strong fundamentals and strategic market position, Steel Dynamics Inc presents a compelling case for value investors seeking growth and stability.
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.
