Steel Dynamics Analysis

Industry Information

Steel Dynamics is the fifth largest producer of carbon steel products in United States. Steel Dynamics stock ticker is STLD. They were founded in 1993 and are a state of the art mill company and world leaders when it comes to mini-mill production of flat-rolled steels and metals recycler. They have had revenue of $6.3 billion in 2010 with over 5.3 million tons of steel shipments. In 2007 Steel Dynamics acquired the Techs, three greatly successful plants in Pittsburgh that coat flat-rolled steel. They are based in Fort Wayne, Indiana and employ about 6,100 with five electric furnace mini mills. 60% of Steel Dynamics shipments are flat-rolled sheets of steel. "SDI is among the most profitable American steel companies in terms of profit margins and operating profit per ton."

Financial Information

They are a public company traded as part of the NASDAQ as STLD. The industry they are incorporated with is Metals. They make steel products and had revenues of $7,997.50 million in 2011. They now hold 6,300 employees and website is: www.Steeldynamics.com. They're primary source of revenue is coming from the sale of steel products. The Company operates in three segments: steel operations, metals recycling and ferrous resources operations, and steel fabrication operations. A highlight of key financial information is provided in the table below:

Steel Dynamics

Year End Date 12/31/2011

Assets $5,979.23

Liabilities $3,663.28

SE $2,315.94

Revenue $7,997.50

Net Income $278.12

DuPont Analysis

DuPont analysis consists of calculating the Return on Equity (ROE) for a company by computing four different financial ratios of the company: 1) Return on Sales (ROS), 2) Asset Turnover (A T/O), 3) Return on Assets (ROA), and 4) Leverage (LEV). By multiplying these ratios together in the following order, we can calculate a company's ROE:

ROS x A T/O = ROA x LEV = ROE

See the table below for the DuPont Analysis of Steel Dynamics as well as the comparison with the industry and the S&P 500 index.

Steel Dynamics Industry S&P 500

Year End Date 12/31/2011 N/A 12/31/2011

ROS 3.48% 10.26% 13%

Asset T/O 1.34 0.9 0.8

ROA 4.65% 7.60% 10.40%

LEV 2.58 2.4 2.5

ROE 12.01% 15.51% 26%