Steel Stock Story

STLD -  USA Stock  

USD 59.37  0.23  0.39%

As many rational traders are trying to avoid basic materials space, it makes sense to digest Steel Dynamics a little further and understand how it stands against Chesapeake Energy and other similar entities. We are going to discuss some of the competitive aspects of both Steel and Chesapeake.
Published over a month ago
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Will Steel Dynamics (NASDAQ:STLD) shareholders shift to Chesapeake (NASDAQ:CHK)?
By analyzing existing essential indicators between Steel Dynamics and Chesapeake, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in Chesapeake with a short position in Steel Dynamics. Check out our pair correlation module for more information.

Let's begin by analyzing the assets.
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Steel Dynamics has an asset utilization ratio of 208.64 percent. This indicates that the company is making $2.09 for each dollar of assets. An increasing asset utilization means that Steel Dynamics is more efficient with each dollar of assets it utilizes for everyday operations.

How important is Steel Dynamics's Liquidity

Steel Dynamics financial leverage refers to using borrowed capital as a funding source to finance Steel Dynamics ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Steel Dynamics financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Steel Dynamics's total debt and its cash.

How Steel utilizes its cash?

To perform a cash flow analysis of Steel Dynamics, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Steel Dynamics is receiving and how much cash it distributes out in a given period. The Steel Dynamics cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Steel Dynamics Net Cash Flow from Operations is projected to increase significantly based on the last few years of reporting. The past year's Net Cash Flow from Operations was at 987.03 Million

An Additional Perspective On Steel Dynamics

Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include product or services discounts, promotions, as well as early payments on invoices or services rendered in advance.

Revenue Breakdown

Let me now go over Steel Dynamics revenue. Based on the latest financial disclosure, Steel Dynamics reported 12.94 B of revenue. This is 64.65% higher than that of the Basic Materials sector and 3.53% higher than that of the Steel industry. The revenue for all United States stocks is 37.15% lower than that of Steel Dynamics. As for Chesapeake Energy we see revenue of 5.78 B, which is 53.75% lower than that of the Steel

Steel12.94 Billion
Sector7.86 Billion
Chesapeake5.78 Billion
12.9 B
Steel
7.9 B
Sector
5.8 B
Chesapeake

Steel Dynamics is epected to finish above $60 in November

Latest Risk Adjusted Performance is up to 0.02. Price may dip again.
As of the 17th of October 2021, Steel Dynamics has the Coefficient Of Variation of 6791.85, semi deviation of 2.33, and Risk Adjusted Performance of 0.0184. In relation to fundamental indicators, the technical analysis model makes it possible for you to check existing technical drivers of Steel Dynamics, as well as the relationship between them. In other words, you can use this information to find out if the company will indeed mirror its model of past prices and volume data, or the prices will eventually revert. We were able to break down and interpolate nineteen technical drivers for Steel Dynamics, which can be compared to its competition. Please validate Steel Dynamics variance, as well as the relationship between the maximum drawdown and semi variance to decide if Steel Dynamics is priced more or less accurately, providing market reflects its prevalent price of 61.67 per share. Given that Steel Dynamics has jensen alpha of 0.0172, we advise you to double-check Steel Dynamics's current market performance to make sure the company can sustain itself at a future point.

Our Bottom Line On Steel Dynamics

Although some other companies in the steel industry are either recovering or due for a correction, Steel may not be as strong as the others in terms of longer-term growth potentials. The bottom line, as of the 17th of October 2021, we believe that at this point, Steel Dynamics is undervalued with low odds of financial distress within the next 2 years. Our actual buy-hold-sell advice on the firm is Strong Hold.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Steel Dynamics. Please refer to our Terms of Use for any information regarding our disclosure principles.

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