Just days ago, Morgan Stanley downgraded Steel Dynamics, with a price target of $77. The firm also downgraded the steel sector to In Line, believing steel prices peaked.
All because the “good times are ending,” as noted by CNBC.
Steel companies don’t seem to agree.
In fact, they say the red-hot steel market could extend into 2022. According to The Wall Street Journal, “The extended boom in the $180 billion U.S. steel industry that began last year following the CV-related shutdowns of mills is giving steelmakers more time to bring new plants into service and renew customer contracts at higher prices.”
Plus, steel inventories are still tight, with demand gaining momentum.
It’s part of the reason US Steel, for example, just crushed earnings, with adjusted EPS of $5.36 on $6 billion in sales. Meanwhile, the Street was only looking for $4.87 EPS on $5.8 billion. The company also announced it would buy back $300 million in stock, and hiked its dividend to five cents from a penny.
“We continue setting records, including record net earnings, record Ebitda, record Ebitda margin, record liquidity, record safety, and record quality and reliability,” said CEO David Burritt, as quoted by Barron’s. “Our balance sheet has been transformed and the cash flow generation of the business has us highly confident in our ability to pre-fund organic growth investments.”
Let the good times roll.
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