Steel Dynamics (NASDAQ: STLD) and United States Steel (NYSE:X) are both basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, risk, profitability and valuation.
This table compares Steel Dynamics and United States Steel’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|United States Steel||3.16%||12.56%||3.54%|
Steel Dynamics pays an annual dividend of $0.62 per share and has a dividend yield of 1.3%. United States Steel pays an annual dividend of $0.20 per share and has a dividend yield of 0.5%. Steel Dynamics pays out 18.4% of its earnings in the form of a dividend. United States Steel pays out 11.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Institutional & Insider Ownership
85.5% of Steel Dynamics shares are owned by institutional investors. Comparatively, 68.3% of United States Steel shares are owned by institutional investors. 4.2% of Steel Dynamics shares are owned by insiders. Comparatively, 1.0% of United States Steel shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Risk and Volatility
Steel Dynamics has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500. Comparatively, United States Steel has a beta of 2.79, meaning that its stock price is 179% more volatile than the S&P 500.
Valuation & Earnings
This table compares Steel Dynamics and United States Steel’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Steel Dynamics||$9.54 billion||1.16||$812.74 million||$3.37||13.93|
|United States Steel||$12.25 billion||0.57||$387.00 million||$1.72||23.23|
Steel Dynamics has higher earnings, but lower revenue than United States Steel. Steel Dynamics is trading at a lower price-to-earnings ratio than United States Steel, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings and target prices for Steel Dynamics and United States Steel, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|United States Steel||2||7||8||0||2.35|
Steel Dynamics presently has a consensus price target of $46.64, suggesting a potential downside of 0.65%. United States Steel has a consensus price target of $36.91, suggesting a potential downside of 7.63%. Given Steel Dynamics’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Steel Dynamics is more favorable than United States Steel.
Steel Dynamics beats United States Steel on 12 of the 16 factors compared between the two stocks.
Steel Dynamics Company Profile
Steel Dynamics, Inc. is a steel producing and a metal recycling company. The Company is engaged in the manufacture and sale of steel products, processing and sale of recycled ferrous and nonferrous metals, and fabrication and sale of steel joists and deck products. Its segments include steel operations, metals recycling operations, steel fabrication operations and Other Operations. It offers a range of steel products, such as sheet products, long products and steel finishing. The steel operations segment includes Butler Flat Roll Division, Columbus Flat Roll Division, The Techs galvanizing lines, Structural and Rail Division, Engineered Bar Products Division, Roanoke Bar Division, Steel of West Virginia and Iron Dynamics. The metals recycling operations segment consists of OmniSource Corporation. The fabrication operations produce steel building components. The Other Operations segment consists of subsidiary operations and smaller joint ventures.
United States Steel Company Profile
United States Steel Corporation is an integrated steel producer. The Company is engaged in producing flat-rolled and tubular products with production operations in North America and Europe. The Company operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE) and Tubular Products (Tubular). The Flat-Rolled segment includes the operating results of its integrated steel plants and equity investees in the United States involved in the production of slabs, rounds, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States. The USSE segment includes the operating results of U. S. Steel Kosice (USSK) and its integrated steel plant and coke production facilities in Slovakia. The Tubular segment includes the operating results of its tubular production facilities, primarily in the United States and equity investees in the United States and Brazil.
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