Steel Dynamics expects stronger third-quarter steel profitability, driven by record shipments and wider metal margins, while metals recycling earnings are projected to decline sequentially.

  • Wells Fargo cited free cash flow optionality and potential steel/aluminum margin upside despite trimming estimates.
  • Koyfin data show a mixed analyst view, with seven analysts rating STLD ‘Buy,' two ‘Strong Buy,’ and four ‘Hold.’
  • The company’s backlog is nearly 50% above year-ago Q3 levels and extends through the first quarter of 2027.

Steel Dynamics (STLD) shares fell nearly 5% on Friday after the steelmaker issued third-quarter earnings guidance below Wall Street expectations, but analysts remain hopeful about its solid fundamentals.

On Thursday, the company said it expects third-quarter earnings of $5.34 to $5.38 per diluted share, compared with $3.69 in the second quarter and $2.74 in the year-ago quarter. The guidance came below the $5.60 consensus cited by The Fly.

Following the release of the quarterly guidance, JPMorgan and Wells Fargo updated their price targets on the stock, according to The Fly.

Wall Street Takes Mixed View On Steel Dynamics

According to The Fly, JPMorgan described the mid-quarter update as a slight miss against a continued solid fundamental backdrop and lowered its price target to $272 from $273 while maintaining its ‘Neutral’ rating.

Wells Fargo also lowered its estimates following the update but raised its price target to $257 from $255 and maintained an ‘Overweight’ rating. According to TheFly, the firm said steel fabrication remained muted, while it remained constructive on free cash flow optionality and potential upside in steel and aluminum margins. 

According to Koyfin data, seven of the 14 analysts rate STLD ‘Buy,’ two rate it ‘Strong Buy,’ and the remaining four rate the stock ‘Hold.’

Steel Dynamics’ Q3 Expectations 

Steel Dynamics expects third-quarter profitability from its steel operations to be significantly higher than in the second quarter, driven by expanded metal margins across its platform and record shipments.

The company expects average realized steel selling values to increase as scrap costs decline. Customer order activity remains strong, while persistently low customer inventories continue to support favorable pricing conditions.

Steel demand remains solid across non-residential construction, energy, automotive and industrial markets. The metals recycling business is expected to report lower third-quarter earnings sequentially due to lower metal spreads and modestly lower shipments.

Fabrication Backlog Extends Into 2027

Steel fabrication earnings are expected to improve modestly sequentially, with stronger shipments offsetting metal spread compression and higher steel input costs.

Steel Dynamics said its current fabrication backlog is nearly 50% higher than prior-year third-quarter levels and extends through the first quarter of 2027.

Customer demand remains healthy across commercial construction, data centers and warehouses, manufacturing and healthcare. Steel Dynamics also expects further growth in fabrication volume in 2027, supported by domestic manufacturing investment, U.S. infrastructure spending, and onshoring activity.

Aluminum Ramp Continues

Steel Dynamics expects Q3 aluminum earnings to improve meaningfully from the second quarter, driven by increased shipments.

At its Columbus, Mississippi, aluminum flat rolled products mill, all three cold mills are now operational. The first of two Continuous Annealing and Solution Heat (CASH) lines is operating and is expected to ship commercial material in the fourth quarter. The second CASH line is expected to begin producing material for customer qualification before the end of the year.

Retail View On STLD 

Retail sentiment on Stocktwits about Steel Dynamics remained in the ‘Neutral’ territory for the past 24 hours.

STLD shares have gained over 33% year-to-date.

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