Wednesday, February 4, 2015

Seeking Alpha: Steel Dynamics May Have Underappreciated Growth Qualities

It remains a bad time to be a steel stock, as most of the major North American and global names are within 10% or so of their 52-week lows. The global market remains oversupplied in most types of steel, with sluggish non-residential construction demand leading the way, while lower input costs have allowed non-integrated mills to continue churning out product.

Like Nucor (NYSE:NUE), Steel Dynamics (NASDAQ:STLD) can only do so much to stand apart from its peers. Steel Dynamics has an enviable record of generating well above-average EBITDA per ton and is well positioned to take advantage of growth opportunities, but concerns about steel prices, end market demand, and import competition linger. The shares do seem undervalued, particularly taking into account improvements in mix and cost structure, but calling any steel (or any commodity) company a "bargain" has to come with the warning that estimates could easily head lower and take notions of "fair value" with them.

Click this link for the full article:
Steel Dynamics May Have Underappreciated Growth Qualities

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