Steel Dynamics (NASDAQ:STLD) and Nippon Steel & Sumitomo Metal (OTCMKTS:NISTF) are both basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, dividends, analyst recommendations and profitability.

Analyst Recommendations

This is a breakdown of current ratings for Steel Dynamics and Nippon Steel & Sumitomo Metal, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Steel Dynamics 0 2 9 0 2.82
Nippon Steel & Sumitomo Metal 0 0 0 0 N/A

Steel Dynamics currently has a consensus target price of $50.10, suggesting a potential upside of 42.65%. Given Steel Dynamics’ higher possible upside, research analysts plainly believe Steel Dynamics is more favorable than Nippon Steel & Sumitomo Metal.

Dividends

Steel Dynamics pays an annual dividend of $0.75 per share and has a dividend yield of 2.1%. Nippon Steel & Sumitomo Metal does not pay a dividend. Steel Dynamics pays out 13.7% of its earnings in the form of a dividend. Steel Dynamics has raised its dividend for 6 consecutive years.

Valuation and Earnings

This table compares Steel Dynamics and Nippon Steel & Sumitomo Metal’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Steel Dynamics $11.82 billion 0.67 $1.26 billion $5.49 6.40
Nippon Steel & Sumitomo Metal N/A N/A N/A N/A N/A

Steel Dynamics has higher revenue and earnings than Nippon Steel & Sumitomo Metal.

Institutional and Insider Ownership

78.2% of Steel Dynamics shares are owned by institutional investors. 4.4% of Steel Dynamics 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.

Profitability

This table compares Steel Dynamics and Nippon Steel & Sumitomo Metal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Steel Dynamics 10.65% 35.44% 17.20%
Nippon Steel & Sumitomo Metal N/A N/A N/A

Summary

Steel Dynamics beats Nippon Steel & Sumitomo Metal on 10 of the 11 factors compared between the two stocks.

Steel Dynamics Company Profile

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.

Nippon Steel & Sumitomo Metal Company Profile

Nippon Steel & Sumitomo Metal Corporation engages in steelmaking and steel fabrication businesses worldwide. It operates in five segments: Steelmaking and Steel Fabrication, Engineering and Construction, Chemicals, New materials, and System Solutions. The company offers steel plates; hot- and cold-rolled steel sheets and coils, coated steel sheets, color coated steel sheets, electrolytic tin plates, and electrical steel sheets; bar and rod materials; and structural steel products. It also provides pipes and tubes; and railway, automotive, and construction and industrial machinery parts, such as railway wheels, driving mechanisms, axles, couplers, bogie trucks, brake disks, control bogies, brake calipers, test equipment, crankshafts and front axles, aluminum wheels, permanent magnet retarders, die materials, mill rolls, circular forgings, forged products for power generation, and shape-memory alloys. In addition, the company offers titanium products for use in automobiles, architecture, civil engineering and ocean development, aircraft, sports gears and consumer products, welded tubes, PHE, and chemical and electrolytic fields; stainless steel sheets, shapes, plates, and wire rods, as well as strips, clad steel sheets, nickel and nickel alloy products, and crystal series products; and steel slags. Further, it manufactures and markets industrial machinery and equipment; performs construction work under contract; and engages in waste processing and recycling activities, as well as in supplying electricity, gas, and heat. Additionally, the company offers coal-based chemical products and petrochemicals, as well as electronic materials; and materials for semiconductors and electronic parts, carbon fiber and composite products, and products that apply technologies for metal processing. It also provides computer systems engineering and consulting services; and IT-enabled outsourcing and other services. The company was founded in 1949 and is headquartered in Tokyo, Japan.

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