Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Paying user area
Try for free
Steel Dynamics Inc. pages available for free this week:
- Income Statement
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Steel Dynamics Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Steel Dynamics Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net operating profit after taxes (NOPAT)
- The NOPAT experienced significant fluctuations over the analyzed period. It nearly doubled from approximately $755 million in 2017 to about $1.42 billion in 2018. However, this was followed by a sharp decline in 2019 and 2020, reaching around $696 million in 2020. A notable rebound occurred in 2021, with NOPAT reaching its highest level in the given timeframe, approximately $3.61 billion.
- Cost of capital
- The cost of capital showed moderate variation, ranging from 14.4% to 16.83%. It decreased from 16.83% in 2017 to 14.4% in 2019, then increased again, ending at 16.4% in 2021. This pattern indicates some volatility in the company’s capital costs, which may have impacted investment decisions and valuation metrics during this period.
- Invested capital
- Invested capital demonstrated a generally upward trend throughout the period. Starting at about $5.96 billion in 2017, it progressively increased each year, reaching approximately $8.55 billion in 2021. This consistent growth suggests ongoing investments or asset acquisitions, which could be aligned with expansion strategies or capital expenditures.
- Economic profit
- Economic profit showed considerable volatility and significant improvement in the most recent year. It was negative in 2017 (-$249 million), positive in 2018 ($375 million), and again negative in 2019 and 2020 with declines to approximately -$141 million and -$331 million, respectively. In 2021, economic profit surged sharply to about $2.21 billion, reflecting a substantial increase in value creation, likely driven by the combination of higher NOPAT and growth in invested capital, despite the relatively high cost of capital.
Net Operating Profit after Taxes (NOPAT)
Steel Dynamics Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for credit losses.
3 Addition of increase (decrease) in equity equivalents to net income attributable to Steel Dynamics, Inc..
4 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2021 Calculation
Tax benefit of interest expense, net of capitalized interest = Adjusted interest expense, net of capitalized interest × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income attributable to Steel Dynamics, Inc..
- Net income attributable to Steel Dynamics, Inc.
- The net income shows a volatile trend over the period analyzed. It increased significantly from 812,741 thousand USD in 2017 to a peak of 1,258,379 thousand USD in 2018. However, this was followed by a sharp decline to 671,103 thousand USD in 2019 and a further decrease to 550,822 thousand USD in 2020. In 2021, net income experienced a remarkable surge, reaching 3,214,066 thousand USD, the highest level in the five-year span.
- Net operating profit after taxes (NOPAT)
- The NOPAT values exhibit a similar pattern to net income, indicating operational profitability dynamics. Starting at 755,373 thousand USD in 2017, NOPAT rose substantially to 1,420,457 thousand USD in 2018. Subsequently, it experienced a decline, reaching 827,375 thousand USD in 2019 and decreasing slightly to 696,079 thousand USD in 2020. In 2021, NOPAT showed a significant increase to 3,611,424 thousand USD, surpassing prior years and indicating improved operational efficiency or favorable business conditions.
- Insights
- Both net income and NOPAT demonstrate a pattern of considerable increase in 2018, followed by a decline over the next two years, and then a substantial recovery in 2021. The pronounced increases in 2021 suggest that the company may have benefited from external or internal factors that significantly enhanced profitability. However, the volatility in prior years highlights potential operational challenges or market fluctuations impacting earnings. The alignment between net income and NOPAT trends suggests that both operational performance and overall profitability were similarly affected throughout the period.
Cash Operating Taxes
Steel Dynamics Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Income tax expense
- The income tax expense exhibited significant fluctuation over the five-year period. Starting at approximately $129 million in 2017, it sharply increased to nearly $364 million in 2018. This was followed by a marked reduction to about $197 million in 2019 and further declined to approximately $135 million in 2020. However, in 2021, there was a dramatic spike to over $962 million, representing the highest value in the observed timeframe.
- Cash operating taxes
- Cash operating taxes showed a different pattern compared to the income tax expense. Initially, there was a moderate rise from roughly $317 million in 2017 to $332 million in 2018. This was succeeded by a substantial decrease to about $176 million in 2019, continuing downward to $110 million in 2020. In 2021, cash operating taxes reversed the downward trend, surging significantly to around $656 million, though still below the 2017 and 2018 levels.
- Comparison and analysis
- Both income tax expense and cash operating taxes experienced fluctuations with a notable peak in 2021. Income tax expense showed more volatility with its lowest value in 2017 and highest in 2021, while cash operating taxes maintained a relatively higher baseline in the earlier years before a marked decline and subsequent increase in 2021. The considerable rise in both metrics in 2021 might indicate higher taxable income or changes in tax policy or company financial structure. The differing trajectories from 2017 to 2020 between the two measures suggest variations in timing or recognition of tax-related cash flows versus accrued tax expenses.
Invested Capital
Steel Dynamics Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of equity equivalents to total Steel Dynamics, Inc. equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of trading securities.
- Total reported debt & leases
- The total reported debt and leases show a generally increasing trend over the analyzed period. Starting at approximately 2.43 billion USD in 2017, the figure rose steadily each year up to around 3.21 billion USD by the end of 2021. This indicates a growing leverage or financing through debt and lease obligations over time.
- Total Steel Dynamics, Inc. equity
- Equity values exhibit consistent growth throughout the five-year span. Beginning at approximately 3.35 billion USD in 2017, equity increased to about 6.30 billion USD by 2021, with a notable acceleration between 2020 and 2021. This substantial rise in equity suggests significant retained earnings, capital infusions, or revaluation impacts that strengthened the company’s equity base.
- Invested capital
- Invested capital experienced steady growth from 5.96 billion USD in 2017 to 8.55 billion USD in 2021. The increase is somewhat consistent year over year, with a marked jump in the final year analyzed. This growth reflects an expansion in the total capital allocated in the business, combining both debt and equity financing sources, which supports the company’s operational capacity and potential for value creation.
- Overall trend and insights
- The data reveals a balanced expansion financed through both higher liabilities and substantially increased equity, leading to larger invested capital over the five years. The proportionally higher increase in equity compared to debt may indicate a strategic emphasis on strengthening the financial position and reducing financial risk. The rising invested capital underscores ongoing investments in operational assets or business growth initiatives. Such trends typically reflect robust financial health and an upward trajectory in the company’s scale and capital structure sophistication.
Cost of Capital
Steel Dynamics Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Steel Dynamics Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Freeport-McMoRan Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit Trends
- Economic profit experienced considerable fluctuations over the observed period. In 2017, it was negative at -248,622 thousand US dollars, indicating a loss in terms of economic value added. It improved significantly to a positive 375,118 thousand US dollars in 2018 but dropped back to a negative figure in the subsequent two years, registering -140,614 thousand in 2019 and -331,447 thousand in 2020. A substantial turnaround occurred in 2021 with economic profit rising sharply to 2,208,933 thousand US dollars, reflecting a strong generation of value beyond the cost of capital.
- Invested Capital Analysis
- Invested capital showed a consistent upward trend throughout the five years reviewed. Beginning at 5,964,900 thousand US dollars in 2017, it steadily increased each year, reaching 8,550,168 thousand US dollars by the end of 2021. This continuous growth suggests ongoing investment in assets and operations, possibly aimed at supporting expansion and enhancing production capacity.
- Economic Spread Ratio Patterns
- The economic spread ratio, which measures the difference between return on invested capital and cost of capital, exhibited significant volatility. It started at a negative rate of -4.17% in 2017, then rose to a positive 5.86% in 2018, indicating improved efficiency or profitability relative to capital cost. The ratio declined again to negative values in 2019 (-2.09%) and 2020 (-4.89%), reflecting diminished returns in those years. A notable improvement occurred in 2021, with the ratio surging to 25.83%, suggesting a markedly enhanced return on invested capital far exceeding its cost.
- Summary Insights
- The data reveals a cyclical pattern in profitability as measured by economic profit and economic spread ratio, with periods of losses followed by strong gains. The significant increase in both economic profit and economic spread in 2021 highlights a year of substantial operational improvement or favorable market conditions. Meanwhile, the steady increase in invested capital indicates a commitment to asset growth over time, signaling strategic investments possibly underpinning the observed rise in economic profitability in the latest period.
Economic Profit Margin
Steel Dynamics Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Freeport-McMoRan Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Overview of Economic Profit
- The economic profit exhibits significant volatility across the analyzed periods. Initially, there was a negative economic profit of -248,622 thousand USD at the end of 2017, which shifted to a positive 375,118 thousand USD in 2018. However, this positive trend was not sustained as it reverted to negative figures in 2019 and 2020, with -140,614 thousand USD and -331,447 thousand USD respectively. The year 2021 saw a strong recovery, reaching a markedly positive economic profit of 2,208,933 thousand USD.
- Net Sales Trend
- Net sales demonstrate an overall upward trajectory over the years. Starting at 9,538,797 thousand USD in 2017, sales peaked in 2018 at 11,821,839 thousand USD before declining to 10,464,991 thousand USD in 2019 and further to 9,601,482 thousand USD in 2020. The net sales then surged significantly in 2021, reaching 18,408,850 thousand USD, indicating strong growth in revenue generation in the most recent year.
- Economic Profit Margin Dynamics
- The economic profit margin mirrors the fluctuations observed in economic profit. From a negative margin of -2.61% in 2017, it improved to a positive 3.17% in 2018. This improvement was short-lived as margins declined to negative levels of -1.34% in 2019 and further to -3.45% in 2020. In 2021, the margin surged to a robust 12%, reflecting enhanced profitability relative to sales.
- Insights and Implications
- The financial data indicate that the company faced challenges in maintaining consistent profitability between 2017 and 2020, with economic profit and margins fluctuating between negative and positive values. The decline in net sales during 2019 and 2020 corresponds with deteriorations in economic profit and margins, suggesting possible operational or market difficulties during this period. The substantial increase in both net sales and economic profit in 2021 signifies a marked turnaround in financial performance, potentially due to improved operational efficiency, favorable market conditions, or strategic initiatives leading to better profitability.