Seeking Alpha: Steel Dynamics Grinding Through The Lows

I continue to believe that Nucor (NYSE:NUE) and Steel Dynamics (NASDAQ:STLD) are extremely well-run steel companies, but it's hard for even the best-run companies to make a lot of headway when imports help push prices down almost 40% in a year. Likewise, weakness in energy, off-road machinery, and "general industrial" is an ongoing concern going into 2016.

The good news is that Steel Dynamics has some internal efforts that can help, including ongoing improvements at the Columbus facility and efforts to improve its market penetration in categories like auto production. It also looks as though the government is going to help, as there seems to be a lot more momentum behind efforts to punish artificially cheap steel imports.

Valuation is a head-scratcher. The shares look about 10% undervalued on 2016 EBITDA, but closer to 20% undervalued on 2017 EBITDA and the company has continued to generate cash flow throughout this downturn. I'm not sure there is such a thing as a buy-and-hold materials company, but if you think the outlook for the U.S. economy is going to improve as 2016 goes on, Steel Dynamics could be a name to consider.

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Steel Dynamics Grinding Through The Lows