SUMITOMO Corp/S (SSUMY) versus Steel Dynamics (STLD) Financial Analysis

SUMITOMO Corp/S (OTCMKTS: SSUMY) and Steel Dynamics (NASDAQ:STLD) are both large-cap multi-sector conglomerates companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, analyst recommendations, institutional ownership and earnings.

Insider and Institutional Ownership

0.1% of SUMITOMO Corp/S shares are held by institutional investors. Comparatively, 82.8% of Steel Dynamics shares are held by institutional investors. 4.4% of Steel Dynamics shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

SUMITOMO Corp/S pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Steel Dynamics pays an annual dividend of $0.75 per share and has a dividend yield of 1.6%. SUMITOMO Corp/S pays out 8.8% of its earnings in the form of a dividend. Steel Dynamics pays out 28.3% 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.

Analyst Ratings

This is a summary of recent recommendations and price targets for SUMITOMO Corp/S and Steel Dynamics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SUMITOMO Corp/S 0 0 0 0 N/A
Steel Dynamics 0 4 10 0 2.71

Steel Dynamics has a consensus target price of $50.85, suggesting a potential upside of 11.16%. Given Steel Dynamics’ higher probable upside, analysts plainly believe Steel Dynamics is more favorable than SUMITOMO Corp/S.

Profitability

This table compares SUMITOMO Corp/S and Steel Dynamics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SUMITOMO Corp/S 6.37% 11.78% 3.96%
Steel Dynamics 8.59% 21.60% 9.74%

Earnings and Valuation

This table compares SUMITOMO Corp/S and Steel Dynamics’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SUMITOMO Corp/S $44.56 billion 0.46 $2.85 billion $2.28 7.21
Steel Dynamics $9.54 billion 1.13 $812.74 million $2.65 17.26

SUMITOMO Corp/S has higher revenue and earnings than Steel Dynamics. SUMITOMO Corp/S is trading at a lower price-to-earnings ratio than Steel Dynamics, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

SUMITOMO Corp/S has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500. Comparatively, Steel Dynamics has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500.

Summary

Steel Dynamics beats SUMITOMO Corp/S on 12 of the 15 factors compared between the two stocks.

About SUMITOMO Corp/S

Sumitomo Corporation imports, exports, and trades in various goods and commodities worldwide. The company's Metal Products segment provides steel products, including steel sheets and tubular products, as well as non-ferrous metal products, such as aluminum and titanium. Its Transportation & Construction Systems segment offers products and services related to ship, aerospace equipment, railway and other transportation systems, construction and mining equipment, forest machines, and industrial vehicles. This segment is also involved in the manufacture, distribution, and retail of automobile and automotive parts; and the provision of leasing services. The company's Environment & Infrastructure segment engages in the social infrastructure business, such as electric power, water supply, and sewerage systems; renewable energy business comprising solar photovoltaic, geothermal, and wind power generation; environmental business consisting of batteries and recycling activities; industrial infrastructure business, such as industrial facilities and equipment; and logistics, insurance, and industrial-park-related businesses. Its Media, ICT, Lifestyle Related Goods & Services segment engages in the areas of media, ICT, lifestyle/retail, food/food product, general materials and supplies, construction, and real estate businesses. The company's Mineral Resources, Energy, Chemical & Electronics segment engages in mineral resources, energy, basic chemicals, electronics, and life sciences businesses; trading of carbon products, steel making materials, petroleum, and natural gas, as well as commodity derivatives; and synthetic resin materials, organic/inorganic chemicals, electronic materials, and rare earth elements businesses. This segment is also involved in the pharmaceuticals, agricultural chemicals, fertilizers, pet supplies, and other businesses, as well as the provision of electronic manufacturing services. The company was founded in 1919 and is headquartered in Tokyo, Japan.

About Steel Dynamics

Steel Dynamics, Inc., together with its subsidiaries, engages in the steel products manufacturing and metals recycling businesses in the United States and internationally. The company operates through three segments: Steel Operations, Metals Recycling Operations, and Steel Fabrication Operations. The Steel Operations segment provides hot roll, cold roll, and coated steel products; structural steel beams, pilings, and standard and premium grade rail products; engineered special-bar-quality products; merchant bar products, including angles, merchant rounds, flats, channels, and reinforcing bars; beams, channels, and specialty steel sections; and threaded rod products, and cold drawn and heat treated bars. Its products are used in construction, automotive, manufacturing, transportation, heavy and agriculture equipment, and pipe and tube industry sectors. This segment sells its products directly to end-users, steel fabricators, and service centers. The Metals Recycling Operations segment is involved in the purchase, process, and resale of ferrous and nonferrous scrap metals into reusable forms and grades. Its ferrous products include heavy melting steel, busheling, bundled scrap, shredded scrap, steel turnings, and cast iron products; and nonferrous products comprise aluminum, brass, copper, stainless steel, and other nonferrous metals. This segment also provides transportation logistics, scrap management, marketing, and brokerage services. The Steel Fabrication Operations segment produces steel building components comprising steel joists, girders, trusses, and steel deck products for non-residential steel fabricators. Steel Dynamics, Inc. was founded in 1993 and is headquartered in Fort Wayne, Indiana.

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