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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Steel Dynamics, Inc. (XNAS:STLD) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
STLD
Name:
STEEL DYNAMICS, INC. (XNAS:STLD)
Sector:
659.64M
Industry:
Steel
CEO:
Mr. Mark Millett
Total Employees:
10,640
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is -4.96% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF STEEL DYNAMICS, INC.(STLD) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND STEEL INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
77.94
One Month Price Target:
$78.55
Six Month Price Target :
$81.58
Likely Price in One Year's Time:
Ticker:
$85.22
Likely Trading Range Today Under (Normal Volatility)
$77.66
Price Upper limit ($) :
$78.48
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$73.05
This week:
$67.01
This month :
$56.09
Other Primary facts
Market Cap:
14.49B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
182.61M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
19.42%
-18.17%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$100.59
$90.00
$55.29
$65.88
Medium risk (<10%) entry points
Buy Call
Sell Call
$86.55
Buy Put:
Sell Put:
$84.29
$69.30
$71.59
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
STLD
Sharpe Ratio:
5.04%
Comparison:
STLD, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 33.12% higher than the industry
& ratio is 120.97% higher than the market/S&P 500 average
Average Returns/Yield of
STLD
Daily returns:
0.17%
Weekly returns:
0.83%
Monthly returns:
3.33%
Yearly returns:
34.75%
Comparison of returns:
Average annual returns/yield (last 3 years) is 15.14% above industry average
Classification:
STLD, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.29
Statistical test of Returns:
STLD has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.13%
Weekly Volatility:
7.01%
Monthly Volatility:
14.02%
Yearly Volatility:
48.55%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
2.93%
Volatility in last five trading days has been -6.42% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.27%
Weekly VaR:
-14.02%
Monthly VaR:
-28.04%
How Much Can the price of
STLD
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-23%
Worst case (decline):
>85%
This translates to price declining to:
$60.11
This translates to price declining to:
$11.69
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
STLD is a 97.90% riskier investment compared to the market/S&P 500 & is 69.54% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -21.19% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
STLD
Beta in relation to market/S&P 500--1.39
Expected beta in 1 year's time:
0.9
Expected beta in 3 year's time:
1.273
Unlevered (debt free) Beta:
1.044
Beta in relation to Nasdaq (XNAS):
0.906
Beta in relation to all global stocks::
0.926
Beta Comparison & Analysis
Beta of competitors/peers::
1.126
Beta is 23.50% higher than peers
Average Industry Beta:
1.33
Beta is 4.57% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
56.07%
Sustainable growth rate is 17.39% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.273
Alpha is 21.54% above industry average alpha yield
Alpha is 1740% higher than market/& is unsustainably high
Analysis of Cost of Capital of
STLD
Equity cost of capital:
0.127
Equity cost of capital is 3.40% above industry mean WACC
Unlevered (without debt) cost of capital:
9.52%
Before-tax cost of debt:
1.84%
After-tax cost of debt:
1.45%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.45%
WACC is 4.04% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$111.90
Revenue growth rate per share of (3Y):
2.04
Annual revenue growth rate is -23.03% below industry average
EPS:
$19.38
Expected Annual growth rate of EPS (3Y):
71.96%
Expected future EPS growth rate is 21.06% higher than the Steel industry
Free cash flow (FCF) per share:
$9.90
Balance sheet equity growth per share: 45.68%
Equity growth rate per share is -356.45% lower than the industry
Debt per share
$16.48
EBITDA per share
$29.99
Valuation Analysis Today of
STLD
P/E Ratio:
3.47
P/E Ratio of Competitors/Peers:
22.16
P/E ratio is -84.36% lower than main peers & is -19.94% lower than the industry
Stock price/value with industry average P/E ratio: $83.88
STLD is -7.08% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $52.61
Present value of the expected future dividends only: $14.19
P/S (Price to Sales ratio):
0.7
Price to sales ratio is 14.75% above the industry mean
P/B (Price to book value ratio):
2.04
Price to free cash flow: 7.87
Price to free cash flow ratio is -13.41% lower than the industry
Net income growth rate (3Y):
195.12%
Net income growth rate is 36.68% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 1.30%
Dividend yeild: 1.54%
Previous Dividend: $0.34
Previous adjusted dividend: $0.34
Previous Dividend: $1.20
Expected next dividend best case: $0.37
Expected next dividend worst case: $0.31
Average dividend payment (long-term): $0.27
Average dividend increase/decrease (growth rate) % per period: 3.89%
Expected next dividend payment date: 13/10/2022
Expected next dividend record date: 28/09/2022
-
Previous dividend payment date: 15/07/2022
Previous dividend record date: 30/06/2022
-
Dividend History:
2022-06-29--$0.34
2021-12-30--$0.26
2021-06-29--$0.26
2022-03-30--$0.34
2021-09-29--$0.26
2021-03-30--$0.26
Dividend growth rate is -112.90% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
43.22%
Net debt to equity ratio:
27.12%
Debt to assets ratio:
23.05%
Net debt to assets ratio:
14.47%
Debt-to-asset ratio is -53.38% below industry average
Ability to repay debt:
Interest coverage ratio:
96.75
Interest coverage ratio is 184.12% more than industry average
Looking forward:
Debt growth rate:
0.10%
Annual debt growth is -84% lower than industry average debt growth rate
Debt repayment rate in last quarter: 10.40%
Analysis of Key Statistics
Correlation of price movement with the market:
0.63
Statistical significance of correlation:
STLD has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.523
Stock price is 20.43% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.523
Correlation of price movement with Nasdaq (^IXIC):
0.036
Covariance of price movement with the market:
0.065
Kurtosis
6.465
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.159
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
STLD
Gross Profit Margin Ratio:
124%
Operating Profit Margin Ratio:
25.46%
Operating profit margin is 73.35% higher than the industry
Net Profit Margin Ratio:
124%
Effective Tax Rate:
23.23%
Effective tax rate is 26.31% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
55.82%
Return on equity (ROE) is 11.66% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
29.77%
Return on assets (ROA) is 53.73% higher than the industry
Financial Leverage:
1.3x
Current Ratio:
3.42
Current ratio is 30.13% above industry average
Cash Conversion Cycle (days):
26.5
Cash conversion cycle is -30.75% below industry average
The remaining useful life of property plant & equipment is: 9.1 years
Stock based compensation to net income ratio:
0.42%
In-depth Efficiency Analysis
Revenue generated per employee:
1.9M
Each employee generates -80% less revenue than industry average revenue per employee
EBITDA generated per employee:
514.7K
Each employee generates -81% less EBITDA than industry average revenue per employee
Profit generated per employee:
365.4K
Each employee generates -83% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
62.0K
Each employee generates -67% less free cash flow than industry average revenue per employee
Assets/Capital per employee
555.2K
Each employee generates -67% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
STLD
ROYAL GOLD, INC. (XNAS:RGLD)
UFP INDUSTRIES, INC. (XNAS:UFPI)
BALCHEM CORPORATION (XNAS:BCPC)
SSR Mining Inc. (XNAS:SSRM)
METHANEX CORPORATION (XNAS:MEOH)
WD-40 COMPANY (XNAS:WDFC)
23ANDME HOLDING CO. (XNAS:ME)
INNOSPEC INC. (XNAS:IOSP)
Green Plains Inc. (XNAS:GPRE)
Current Analyst Ratings
Strong buy�13%
Buy�25%
Hold�17%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
20.43B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
14.09B
6.34B
-
1.11B
1.11B
-
28.96M
1.14B
-
56.61M
348.28M
5.48B
5.20B
3.89B
5.10B
1.18B
3.89B
Statement of Cash Flow
Date:
Period:
87.55M
Differed Income Tax :
2.63M
Stock Based Compensation :
16.52M
Change in Working Capital :
- 406240.00K
Accounts Receivables:
- 447234.00K
Other Working Capital:
341.91M
Other Non-Cash Items:
11.16M
Net Cash Provided by Operating Activities:
818.97M
Investments in PP&E:
- 159330.00K
Net Acquisitions:
- 222480.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
1.19B
-
1.19B
2.36B
3.52B
79.62M
7.15B
4.83B
453.09M
288.18M
-
-
337.77M
5.91B
-
13.06B
1.21B
68.39M
229.36M
-
808.70M
2.09B
3.01B
120.92M
3.99B
-
6.08B
649.00K
8.80B
9.3M
-
March 31, 2022 at 6:00:00 AM
15.23B
6.96B
13.04B
-
3.08B
1.9B
-
410.00K
- 381400.00K
- 349272.00K
-
- 389190.00K
- 50699.00K
297.25M
- 491909.00K
-
- 54341.00K
1.20B
1.25B
818.97M
- 159330.00K
659.64M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
STLD
2023
2024
2025
2026
2027
$85.65
$291.67
$318.93
$348.74
$381.33