Steel Dynamics Rises on Upgrade

Tickers in this article: STLD

NEW YORK (TheStreet) -- Shares of Steel Dynamics(STLD) rose Tuesday after the company was upgraded by TheStreet Ratings.

TheStreet Ratings upgraded Steel Dynamics to a buy from a hold based on strengths that "can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."

Steel Dynamics' fourth-quarter earnings guidance of between 8 cents and 12 cents a share was below analysts' average estimates of 18 cents, according to Thomson Reuters.

The Fort Wayne, Ind.-based steel company has showed positive earnings per share growth in the past year, which TheStreet Ratings anticipates will continue.

"During the past fiscal year, STEEL DYNAMICS INC turned its bottom line around by earning $0.64 versus -$0.14 in the prior year," TheStreet Ratings said. "This year, the market expects an improvement in earnings ($1.20 versus $0.64)."

Of the 18 analysts who cover the company, five consider it a buy and five consider it a strong buy. Eight analysts rate the company a hold.

One of those analysts who rated Steel Dynamics a hold, CRT Capital's Kuni Chen, noted that he expects to see earnings per share growth in 2012. His 2012 earnings per share estimate is $1.60 and his 2013 estimate is $1.90. The company's steel operations will help to drive Steel Dynamic's profit growth this year, Chen noted. He also anticipates the company's metals recycling business to have a better year in 2012.

Chen expects steel prices to be flat this year.

Shares of Steel Dynamics rose 21 cents to $14.63 in trading on Tuesday. TheStreet Ratings' price target on Jan. 6 was $16.71. Chen's fair value for the company is $15.

-- Written by Alexandra Zendrian

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