Financial Review: Steel Dynamics (NASDAQ:STLD) versus Acerinox (OTCMKTS:ANIOY)

Steel Dynamics (NASDAQ:STLD) and Acerinox (OTCMKTS:ANIOY) are both basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, institutional ownership, risk, valuation, profitability and analyst recommendations.

Insider and Institutional Ownership

82.4% of Steel Dynamics shares are owned by institutional investors. 6.3% of Steel Dynamics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Steel Dynamics pays an annual dividend of $2.00 per share and has a dividend yield of 1.1%. Acerinox pays an annual dividend of $0.22 per share and has a dividend yield of 3.2%. Steel Dynamics pays out 25.0% of its earnings in the form of a dividend. Acerinox pays out -244.4% 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. Steel Dynamics has raised its dividend for 13 consecutive years. Acerinox is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Steel Dynamics has a beta of 1.43, suggesting that its share price is 43% more volatile than the S&P 500. Comparatively, Acerinox has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500.

Profitability

This table compares Steel Dynamics and Acerinox’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Steel Dynamics	6.52%	13.56%	7.43%
Acerinox	-0.72%	-1.92%	-0.70%

Analyst Recommendations

This is a summary of current recommendations and price targets for Steel Dynamics and Acerinox, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Steel Dynamics	1	4	5	0	2.40
Acerinox	1	1	2	0	2.25

Steel Dynamics presently has a consensus price target of $182.44, indicating a potential upside of 1.36%. Given Steel Dynamics’ stronger consensus rating and higher probable upside, research analysts plainly believe Steel Dynamics is more favorable than Acerinox.

Valuation and Earnings

This table compares Steel Dynamics and Acerinox”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Steel Dynamics	$18.18 billion	1.43	$1.19 billion	$8.01	22.47
Acerinox	$6.54 billion	0.52	-$45.34 million	($0.09)	-75.80

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

Summary

Steel Dynamics beats Acerinox on 15 of the 17 factors compared between the two stocks.

About Steel Dynamics

Steel Dynamics, Inc., together with its subsidiaries, operates as a steel producer and metal recycler in the United States. The Steel Operations segment offers hot rolled, cold rolled, and coated steel products; parallel flange beams and channel sections, flat bars, large unequal leg angles, and reinforcing steel bars, as well as standard strength carbon, intermediate alloy hardness, and premium grade rail products; engineered special-bar-quality products, merchant-bar-quality products, and other engineered round steel bars; channels, angles, flats, merchant rounds, and reinforcing steel bars; and specialty shapes and light structural steel products. This segment also engages in turning, polishing, straightening, chamfering, precision saw-cutting, and heat treating of bar products. Its products are used in construction, automotive, manufacturing, transportation, heavy and agriculture equipment, and pipe and tube markets. The Metals Recycling Operations segment is involved in the ferrous and nonferrous scrap metal processing, transportation, marketing, brokerage, and scrap management services. 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. The Steel Fabrication Operations segment produces steel non-residential building components, such as steel joists, girders, trusses, and steel deck products for non-residential steel fabricators, metal building companies, general construction contractors, developers, owners, brokers, and governmental entities, as well as e-commerce warehouses, data centers, metal buildings, and education and commercial building projects. The Aluminum Operations segment offers recycled aluminum flat rolled products. The company also exports its products. Steel Dynamics, Inc. was founded in 1993 and is headquartered in Fort Wayne, Indiana.

About Acerinox

Acerinox, S.A., together with its subsidiaries, manufactures, process, and markets stainless steel products in Spain, the United States, Africa, Asia, Rest of Europe, and internationally. It operates through Stainless steel, and High-performance Alloys segments. The company offers flat products, including hot and cold rolled coils and sheets, strips, flat bars, and discs, as well as engraved coil and sheet, black coil, slabs, circles, billets, and plates. It provides long products, which include wire and hexagonal wire rods, peeled bars, hot and cold reinforcement bars, black bars, profiles, angles, and steel profiles, as well as stainless steel, color coated, and reinforcement wires. In additions, it offers stainless steel products, such as austenitic, ferritic, duplex, and martensitic. Acerinox, S.A. was incorporated in 1970 and is headquartered in Madrid, Spain.