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:
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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 exhibited significant fluctuations over the analyzed periods. It nearly doubled from approximately 755 million USD in 2017 to about 1.42 billion USD in 2018. However, it declined sharply in 2019 to around 827 million USD and continued to decrease to approximately 696 million USD in 2020. In 2021, a substantial increase was observed, with NOPAT reaching approximately 3.61 billion USD, marking the highest value within the period.
- Cost of Capital
- The cost of capital showed a slight overall decline from 16.83% in 2017 to 14.4% in 2019. Subsequently, it increased again to 16.4% by 2021, with an intermediate rise to 15.15% in 2020. This suggests a period of decreasing capital costs followed by a return to higher levels.
- Invested Capital
- Invested capital steadily increased throughout the period, rising from about 5.96 billion USD in 2017 to 8.55 billion USD in 2021. The growth appears consistent year to year, indicating a continuous increase in the capital base employed by the company.
- Economic Profit
- Economic profit experienced considerable variation and a notable shift in trend. In 2017, it was negative at approximately -248 million USD, turned positive to 375 million USD in 2018, but then reverted to negative values for 2019 and 2020, at approximately -140 million USD and -331 million USD respectively. In 2021, economic profit surged significantly to about 2.21 billion USD, representing a strong positive turnaround in value creation beyond the cost of capital.
- Overall Analysis
- The data reflect a volatile operating performance with fluctuating profitability and capital costs over the years. The consistent growth in invested capital suggests ongoing investments or expansions. Despite temporary declines in profitability and economic profit during the middle years, there was a marked recovery in 2021. The sharp increase in both NOPAT and economic profit in the final year observed indicates improved operational efficiency and enhanced value generation relative to the capital employed and its cost.
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.
The financial data presents a fluctuating economic profit pattern over the five-year period from 2017 to 2021, with notable volatility and a pronounced recovery in the final year.
- Economic Profit
- The economic profit was negative in 2017, standing at approximately -248 million US dollars. It reversed to a positive value of about 375 million in 2018, indicating improved profitability. However, the subsequent two years, 2019 and 2020, saw declines back into negative territory, with losses deepening to around -140 million and -331 million, respectively. In 2021, there was a significant turnaround, with economic profit soaring to approximately 2.2 billion US dollars, representing a substantial improvement and indicating a highly profitable year.
- Invested Capital
- Invested capital showed a consistent upward trend during the period, rising from approximately 5.96 billion US dollars in 2017 to about 8.55 billion in 2021. This steady increase reflects ongoing capital investment or asset growth, with particularly notable growth between 2020 and 2021.
- Economic Spread Ratio
- The economic spread ratio, which measures the economic profit as a percentage of invested capital, mirrored the volatility seen in economic profit. It was negative at -4.16% in 2017, improved to a positive 5.86% in 2018, then declined again into negative percentages of -2.09% in 2019 and -4.88% in 2020. In 2021, this ratio jumped significantly to 25.84%, indicating not only recovery but also a high return relative to the invested capital.
Overall, the data highlights a period of financial instability between 2017 and 2020, characterized by alternating losses and gains, followed by a remarkable recovery and profitability spike in 2021. The continuous growth in invested capital suggests sustained investment, which ultimately contributed to a strong economic performance in the most recent year. The sharp improvement in economic spread ratio in 2021 emphasizes a better utilization of capital and enhanced value creation during that 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.
- Net Sales
- Net sales displayed a fluctuating pattern over the five-year period. Starting at approximately 9.54 billion USD in 2017, sales increased notably in 2018 to about 11.82 billion USD. However, in 2019 and 2020, net sales declined to roughly 10.46 billion USD and 9.6 billion USD, respectively. A significant rebound occurred in 2021, with net sales surging to approximately 18.41 billion USD, marking the highest value in the observed timeframe.
- Economic Profit
- The economic profit figures showed considerable volatility. In 2017, economic profit was negative at about -248 million USD, transitioning to a positive value of approximately 375 million USD in 2018. This was followed by a return to negative territory in 2019 and 2020, with economic losses of around 140 million USD and 331 million USD, respectively. A sharp and substantial improvement was observed in 2021, when economic profit surged to over 2.2 billion USD, indicating a strong turnaround in economic value created.
- Economic Profit Margin
- The economic profit margin percentage mirrors the economic profit trend but in relative terms. It was negative in 2017 at approximately -2.6%, turned positive in 2018 at around 3.18%, then dipped below zero again in 2019 and 2020, reaching -1.34% and -3.45%, respectively. In 2021, the margin rose dramatically to 12%, reflecting a significant enhancement in profitability relative to net sales.
- Summary of Trends
- The overall analysis suggests a period of fluctuating financial performance with a marked recovery in the final year. While net sales experienced ups and downs, the most pronounced surge occurred in 2021, coinciding with a dramatic increase in economic profit and its margin. The negative values in economic profit and margins during 2017, 2019, and 2020 indicate challenging operational or market conditions in those years. The considerable improvement in 2021 could suggest enhanced operational efficiency, favorable market conditions, or strategic initiatives contributing to stronger financial outcomes.