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Morgan Stanley on Steel Dynamics: Benefit To Earnings Covered By Weather

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Morgan Stanley Sees Upside For Steel Dynamics As Margins Expand

Analyst Evan L. Kurtz at Morgan Stanley on Thursday, April 17, 2014, reiterated coverage on Steel Dynamics (NASDAQ: STLD).

Shares of the company are down $0.93 or 4.92 percent to $17.97 per share. The firm is rating the stock Overweight and views it as In-Line.

The firm commented, “Fabrication business commentary points to continuing improvements in the non-res construction market. Shipments of premium rail and smaller-diameter SBQ began during the quarter. The benefit to earnings was concealed by weather effects, but should become apparent in the coming quarters. While Mesabi nugget work continues, we will be listening for guidance on what the next steps would be if the trials are unsuccessful.”

CFA, Evan L. Kurtz, led the research and has cited STLD's first quarter earnings for 2014 being impacted by poor weather.

Steel Dynamics reported first quarter 2014 adjusted earnings per share of $0.16, which was in-line with Morgan Stanley's estimates of $0.15 and the consensus estimate of $0.16 per share.

According to Morgan Stanley, Steel Dynamics results were negatively impacted by cold weather, which caused higher energy costs, transportation delays, diminished demand, and lower production due to electricity curtailments. In addition, overall metal margins expanded while street metal margins fell.

In addition, according to Morgan Stanley, higher fabrication segment profits suggest underlying conditions are continuing to improve despite poor weather conditions.

Latest Ratings for STLD

DateFirmActionFromTo
Oct 2014KeyBancMaintainsBuy
Sep 2014Goldman SachsReinstatesBuy
Sep 2014Bank of AmericaMaintainsBuy

View More Analyst Ratings for STLD
View the Latest Analyst Ratings

Posted-In: Evan L. Kurtz Morgan StanleyAnalyst Color Reiteration Analyst Ratings

 

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