Steel Dynamics Stock Steady on Long-Term Prospects

Key Points

• Steel Dynamics missed Q2 estimates but posted sequential revenue growth and remains supported by strong infrastructure-driven steel demand.
• The company’s $2.7B aluminum plant and Texas steel facility are key growth drivers with expected ramp-up into 2026 amid tariff-fueled optimism.
• Despite macro and tariff headwinds, STLD stock is holding technical support and analysts see 12% upside with bullish long-term signals.

Steel Dynamics Inc. NASDAQ: STLD is holding on to slim gains after it reported its second quarter 2025 earnings after the market closed on July 21. The pullback comes after a gain of nearly 3% after the earnings report.

The post-earnings gain was consistent with other basic materials stocks that had a strong opening to the week. This was particularly true of domestic steel producers like Cleveland-Cliffs Inc. NYSE: CLF and United States Steel Co. NYSE: X, which are also moving higher.

Steel Dynamics reported slight misses on the top and bottom lines. Revenue of $4.57 billion missed expectations for $4.82 billion. However, it was up from the $4.37 billion it reported in the prior quarter and only down by about 1% year-over-year (YOY). Earnings per share (EPS) of $2.01 were about 21% lighter than analysts’ forecasts for $2.56 per share and were down 26% YOY.

However, investors seem to be looking beyond the current print and believe in the company’s optimism about what comes next. That means expanding economic activity that will benefit U.S. steel production.

For now, that also means looking beyond increased operating costs as Steel Dynamics expands its operations in anticipation of renewed activity. The company recently completed a new steel plant in Texas and is ramping up plant activity at its $2.7 billion aluminum plant in Mississippi.

The Good and the Bad of Tariff Policy

The Trump administration's tariffs on foreign steel are expected to make U.S. steel manufacturers like Steel Dynamics and Cleveland-Cliffs more attractive. Steel Dynamics' core competency in flat-rolled steel is expected to be a winner, as flat and long steel products are essential to refurbishing bridges and highways.

However, as Steel Dynamics reported, the tariffs could create economic activity barriers. That was the case in the current quarter with the company citing the administration’s tariff policy as a reason for the double miss. The key issue for investors will be whether they believe this is a transitory issue.

Two areas in the company’s report support that positive outlook. The company’s steel fabrication business was down by approximately 50% year over year and 20% from the prior quarter. However, the report also pointed to a backlog that is up 15% extending into 2026.

The same may be true of aluminum production. Steel Dynamics expects to achieve 40%-50% utilization by the end of 2025, with an acceleration to 75% in 2026. Supporting this ramp-up is the company’s focus on can sheet, a less cyclical product.

The company also has significant exposure to the auto industry, but that will depend on auto tariffs remaining at 25%.

Uncertainty at a Glance

In 2025, STLD stock has been in a consolidation pattern. The low was hit in April, which corresponded with maximum tariff fears. The stock has recovered since then, but after a mixed report, investors may have to wait another quarter or two before getting a definitive move higher.

For the better part of the year, the stock price has been trading above its 50-day simple moving average. If it can hold above that level, investors will be more likely to believe in a move higher. The MACD also appears ready for a bullish reversal.

But investors should wait for confirmation of that move. Current analyst sentiment has a consensus price target of $149.33, a 12% increase from its current price.

The year-to-date gain of 17% in STLD stock and a dividend with a 1.5% yield means the stock may be closer to hitting its three-year average total return of around 33%.