Steel Dynamics Inc. (NASDAQ:STLD)

Return on Assets (ROA)

The Return on Assets shows a fluctuating trend over the five-year period. It peaked in 2018 at 16.34%, then decreased significantly in 2019 and 2020 to 8.11% and 5.94% respectively. A pronounced recovery occurred in 2021, with ROA reaching its highest value in the period at 25.65%.

Financial Leverage

Financial Leverage remained relatively stable across the years, fluctuating slightly between 1.96 and 2.13 ratio points. The highest leverage was observed in 2020 at 2.13, whereas the lowest was in 2018 at 1.96. The value in 2021 decreased marginally to 1.99, indicating a slight reduction in debt relative to equity.

Return on Equity (ROE)

Return on Equity experienced notable variation across the period. It increased from 24.25% in 2017 to 31.98% in 2018, followed by a decline through 2019 and 2020 to 16.47% and 12.68%, respectively. A strong rebound was seen in 2021, with ROE surging to 50.98%, the highest in the timeframe analyzed.

Net Profit Margin

The net profit margin exhibited variability over the five-year period. It increased from 8.52% in 2017 to a peak of 10.64% in 2018, followed by a decline to 6.41% in 2019 and further to 5.74% in 2020. In 2021, there was a substantial increase to 17.46%, representing the highest margin within the period analyzed.

Asset Turnover

The asset turnover ratio showed a generally decreasing trend from 1.39 in 2017 to 1.04 in 2020, indicating declining efficiency in generating sales from assets. However, in 2021, the ratio rebounded to 1.47, the highest in the observed timeframe, suggesting an improvement in asset utilization during the most recent period.

Financial Leverage

Financial leverage remained relatively stable across the years with minor fluctuations. The ratio started at 2.05 in 2017, slightly decreased to 1.96 in 2018, then increased marginally to 2.13 in 2020 before settling at 1.99 in 2021. This indicates a consistent approach to the use of debt in the capital structure without significant changes.

Return on Equity (ROE)

The return on equity showed significant volatility. It rose sharply from 24.25% in 2017 to 31.98% in 2018, then decreased notably to 16.47% in 2019 and further to 12.68% in 2020. A dramatic increase occurred in 2021, reaching 50.98%, the highest ROE in the five years, driven likely by improved profit margins and asset turnover.

Tax Burden

The tax burden ratio exhibits a gradual decline from 0.86 in 2017 to a low of 0.77 in both 2019 and 2021, with a slight increase to 0.80 in 2020. This trend indicates a generally decreasing proportion of income paid as tax over the analyzed period, which could suggest improved tax efficiency or changes in tax regulations affecting the company.

Interest Burden

The interest burden ratio shows moderate fluctuations, starting at 0.88 in 2017, rising to 0.93 in 2018, decreasing to 0.87 in 2019, maintaining at 0.88 in 2020, and reaching a peak of 0.99 in 2021. The increasing trend toward 0.99 indicates a reduced interest expense impact relative to earnings before interest and taxes, suggesting improvements in managing financing costs or debt structure late in the period.

EBIT Margin

The EBIT margin has considerable volatility, rising sharply from 11.29% in 2017 to 14.79% in 2018, then declining to 9.51% in 2019 and further to 8.13% in 2020 before surging dramatically to 23% in 2021. This pattern points to challenges in operating profitability over several years, followed by a strong recovery or operational improvement in the last year examined.

Asset Turnover

The asset turnover ratio decreases steadily from 1.39 in 2017 to a low of 1.04 in 2020, indicating a reduction in the efficiency of asset utilization to generate sales. However, there is a noticeable rebound to 1.47 in 2021, which suggests a return to more efficient use of assets in generating revenue.

Financial Leverage

Financial leverage remains relatively stable with minor fluctuations: starting at 2.05 in 2017, dipping slightly to 1.96 in 2018, then increasing to 2.03 in 2019 and 2.13 in 2020, before decreasing to 1.99 in 2021. This indicates consistent use of debt or equity financing with small variations in the company's capital structure throughout the period.

Return on Equity (ROE)

The return on equity exhibits significant variability, increasing from 24.25% in 2017 to a peak of 31.98% in 2018, then falling sharply to 16.47% in 2019 and further to 12.68% in 2020. In 2021, it rises substantially to 50.98%. This sharp increase at the end of the period may reflect improved net income attributable to shareholders triggered by operational improvements, financial leverage adjustments, or a combination of factors.

Net Profit Margin

The net profit margin exhibited a fluctuating trend over the analyzed period. It increased from 8.52% in 2017 to a peak of 10.64% in 2018, then declined to 6.41% in 2019 and further to 5.74% in 2020. A significant recovery occurred in 2021, with the margin soaring to 17.46%, representing the highest value in the timeframe and indicating improved profitability in the most recent year.

Asset Turnover

The asset turnover ratio showed variability, starting at 1.39 in 2017 and rising to 1.53 in 2018, suggesting enhanced efficiency in using assets to generate sales. This was followed by a decline to 1.26 in 2019 and further to 1.04 in 2020, implying reduced asset utilization. The ratio rebounded to 1.47 in 2021, signaling a recovery in operational efficiency.

Return on Assets (ROA)

The return on assets mirrored the trends observed in net profit margin and asset turnover, reflecting overall profitability and asset utilization. ROA rose from 11.85% in 2017 to 16.34% in 2018, then sharply dropped to 8.11% in 2019 and further to 5.94% in 2020. In 2021, ROA increased markedly to 25.65%, which is the highest in the reviewed period. This sharp increase indicates substantial improvements in generating returns from assets.

Overall Insights

The period from 2017 to 2020 was characterized by initial growth followed by declines in key profitability and efficiency metrics, likely reflecting operational or market challenges. The year 2021 marked a pronounced turnaround, with significant improvements in net profit margin, asset turnover, and return on assets, indicative of enhanced profitability and asset management. These trends suggest successful strategic adjustments or favorable market conditions in the most recent year, contributing to stronger financial performance.

The financial data reveals several notable trends over the five-year period ending December 31, 2021. Analysis of key ratios indicates variability in operational efficiency, profitability, and overall asset performance.

Tax Burden

The tax burden ratio fluctuated mildly, starting at 0.86 in 2017 and declining to 0.77 by 2021. This suggests a gradual reduction in the proportion of earnings paid as taxes, potentially reflecting improved tax planning or changes in tax regulations.

Interest Burden

The interest burden ratio showed some variation, generally remaining within a narrow range between 0.87 and 0.99. Notably, there was an increase from 0.88 in 2020 to 0.99 in 2021, indicating a reduction in interest expenses relative to earnings before interest and taxes, which may reflect lower debt levels or favorable interest rates.

EBIT Margin

The EBIT margin experienced significant volatility. It peaked at 23% in 2021 after a dip to 8.13% in 2020, indicating considerable improvement in operational profitability in the latest year. Prior to the 2020 decline, the margin had been relatively strong, with a high of 14.79% in 2018, followed by a drop in 2019 and 2020.

Asset Turnover

Asset turnover decreased from 1.53 in 2018 to a low of 1.04 in 2020, before recovering to 1.47 in 2021. This trend highlights a decrease in asset utilization efficiency peaking in 2020, with a subsequent rebound suggesting improved revenue generation from assets most recently.

Return on Assets (ROA)

ROA mirrored the patterns observed in EBIT margin and asset turnover. It declined from a high of 16.34% in 2018 to 5.94% in 2020, but then sharply recovered to 25.65% by 2021, indicating a significant enhancement in the company's ability to generate profit from its asset base in the final year.

Tax Burden Ratio

The tax burden ratio exhibited a generally declining trend from 0.86 in 2017 to 0.77 in 2019, followed by a slight recovery to 0.80 in 2020 before decreasing again to 0.77 in 2021. This pattern indicates a moderate reduction in the proportion of earnings retained after taxes over the period, suggesting some variability in effective tax rates or tax strategies.

Interest Burden Ratio

The interest burden ratio showed an initial increase from 0.88 in 2017 to 0.93 in 2018, then fluctuated modestly around the 0.87 to 0.99 range during 2019 to 2021. The final rise to 0.99 in 2021 reflects an improvement in the ability to cover interest expenses from operating income, potentially pointing to reduced interest expenses or improved operational efficiency.

EBIT Margin

The EBIT margin experienced significant fluctuations throughout the period. It increased sharply from 11.29% in 2017 to 14.79% in 2018, then declined steadily to 8.13% by 2020. A noteworthy recovery occurred in 2021, with the EBIT margin surging to 23%, more than doubling the previous year's figure. This volatility suggests operational challenges mid-period, followed by a strong rebound in profitability before interest and taxes.

Net Profit Margin

The net profit margin followed a similar pattern to the EBIT margin, rising from 8.52% in 2017 to 10.64% in 2018, then declining to lows of 5.74% by 2020. In 2021, a pronounced recovery occurred with the margin jumping to 17.46%. This pattern indicates that the company’s bottom-line profitability was temporarily compressed before recovering sharply, likely due to improvements in operational efficiency, cost management, or other financial factors.