Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Operating Profit Margin since 2005
- Current Ratio since 2005
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Profitability Ratios (Summary)
Steel Dynamics Inc., profitability ratios
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).
- Gross Profit Margin
- The gross profit margin exhibited variability over the observed period. It increased from 16.59% in 2017 to a peak of 19.65% in 2018, followed by a decline in 2019 and 2020 to 14.63% and 14.94% respectively. In 2021, there was a notable rise to 29.13%, indicating a significant improvement in production efficiency or pricing power during that year.
- Operating Profit Margin
- The operating profit margin showed a similar trend to the gross profit margin. It rose from 11.18% in 2017 to 14.57% in 2018, then decreased in 2019 and 2020 to 9.43% and 8.82%. A sharp increase to 23.36% was observed in 2021, reflecting improved control over operating expenses or better operational performance in the final year.
- Net Profit Margin
- The net profit margin improved from 8.52% in 2017 to 10.64% in 2018, declined to 6.41% in 2019 and further slightly to 5.74% in 2020. A considerable recovery was seen in 2021 with the margin rising to 17.46%, indicating enhanced overall profitability potentially driven by improved efficiency or favorable financial factors.
- Return on Equity (ROE)
- Return on equity demonstrated pronounced fluctuations. The ROE increased sharply from 24.25% in 2017 to 31.98% in 2018, then fell substantially to 16.47% in 2019 and 12.68% in 2020. In 2021, it surged dramatically to 50.98%, signaling very strong shareholder returns during that year, which may be attributed to higher net income or improved capital management.
- Return on Assets (ROA)
- Return on assets followed a pattern consistent with other profitability metrics. It rose from 11.85% in 2017 to 16.34% in 2018, then declined to 8.11% in 2019 and to 5.94% in 2020. A significant increase to 25.65% in 2021 was noted, implying enhanced asset efficiency and profitability in the most recent period.
Return on Sales
Return on Investment
Gross Profit Margin
Steel Dynamics Inc., gross 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) | ||||||
| Gross profit | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| 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 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data over the five-year period reveals several noteworthy trends in profitability and sales performance.
- Net Sales
- Net sales roughly showed an initial increase from approximately 9.54 billion US dollars in 2017 to about 11.82 billion in 2018. This was followed by a decline in both 2019 and 2020, reaching a low of around 9.60 billion US dollars. However, a significant recovery and growth occurred in 2021, with net sales jumping markedly to approximately 18.41 billion US dollars. This surge suggests a strong rebound and expansion in sales activity in the most recent year.
- Gross Profit
- Gross profit exhibited a somewhat volatile pattern during the period. It increased significantly from 1.58 billion US dollars in 2017 to a peak of around 2.32 billion in 2018, then fell sharply over the next two years, reaching 1.43 billion in 2020. Like net sales, gross profit rose dramatically in 2021 to 5.36 billion US dollars, a level substantially higher than any of the previous years. This sharp increase corresponds with the rise in net sales and indicates improvement in cost control or higher product margins.
- Gross Profit Margin
- The gross profit margin percentage fluctuated over the timeframe. Starting at 16.59% in 2017, it increased to 19.65% in 2018, reflecting improved profitability relative to sales. However, this ratio declined to 14.63% in 2019 and slightly recovered to 14.94% in 2020. Notably, the gross profit margin more than doubled in 2021, reaching 29.13%. This substantial improvement in margin suggests enhanced efficiency, pricing power, or a favorable product mix contributing to profitability beyond the increase in sales volume alone.
Operating Profit Margin
Steel Dynamics Inc., operating 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) | ||||||
| Operating income | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Freeport-McMoRan Inc. | ||||||
| Operating Profit Margin, Industry | ||||||
| Materials | ||||||
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 2021 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- The operating income experienced a notable fluctuation over the observed periods. It initially increased significantly from 1,066,881 thousand USD in 2017 to 1,722,409 thousand USD in 2018. This was followed by a sharp decline in 2019 and 2020, reaching 986,880 thousand USD and 847,142 thousand USD, respectively. A substantial recovery occurred in 2021, with operating income rising dramatically to 4,301,105 thousand USD, representing the highest value within the five-year span.
- Net Sales
- Net sales showed an overall upward trend with some variability. From 2017 to 2018, net sales increased from 9,538,797 thousand USD to 11,821,839 thousand USD. After a decline in 2019 and 2020, net sales decreased to 10,464,991 thousand USD and 9,601,482 thousand USD, respectively. In 2021, net sales surged to 18,408,850 thousand USD, reaching a peak that surpasses previous years by a considerable margin.
- Operating Profit Margin
- The operating profit margin mirrors the pattern of operating income, reflecting changes in operational efficiency and profitability. The margin improved from 11.18% in 2017 to 14.57% in 2018, followed by a decline in 2019 and 2020 to 9.43% and 8.82%, respectively. The margin recovered sharply in 2021, increasing to 23.36%, indicating a significant improvement in profitability relative to net sales in that year.
- Summary of Trends
- The data reveals a period of volatility in both sales and profitability from 2017 through 2020, with initial growth followed by declines. The year 2021 marked a significant turnaround, with strong growth in net sales and a marked increase in operating income and profit margins. This suggests improved operational performance and potentially favorable market conditions or management effectiveness during the latest period. The sharp recovery in 2021 may merit further investigation to understand the drivers behind the strong financial performance.
Net Profit Margin
Steel Dynamics Inc., net 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) | ||||||
| Net income attributable to Steel Dynamics, Inc. | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Freeport-McMoRan Inc. | ||||||
| Net Profit Margin, Industry | ||||||
| Materials | ||||||
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 2021 Calculation
Net profit margin = 100 × Net income attributable to Steel Dynamics, Inc. ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data over the five-year period reveals several key trends and insights regarding profitability and sales performance.
- Net Income Attributable to Steel Dynamics, Inc.
- The net income shows fluctuations throughout the period. Starting from $812.7 million in 2017, it increased significantly to $1.26 billion in 2018. However, there was a notable decline in 2019 and 2020, dropping to $671.1 million and $550.8 million respectively. In 2021, the net income surged sharply to $3.21 billion, representing the highest value in the dataset and indicating strong profitability recovery or growth.
- Net Sales
- Net sales also exhibited variability but with an overall increasing trend. From $9.54 billion in 2017, sales rose to $11.82 billion in 2018, then decreased sequentially in 2019 and 2020 to $10.46 billion and $9.60 billion respectively. A considerable increase occurred in 2021, with net sales reaching $18.41 billion, which is a substantial rise compared to previous years and suggests expanded business activities or improved market conditions.
- Net Profit Margin
- The net profit margin followed a pattern reflecting the changes in profitability. Starting at 8.52% in 2017, it improved to 10.64% in 2018, indicating enhanced efficiency or better cost management. The margin declined to 6.41% in 2019 and further to 5.74% in 2020, coinciding with the drop in net income and sales, likely due to adverse market or operational challenges. In 2021, the margin increased markedly to 17.46%, aligning with the sharp growth in net income and sales, demonstrating significant improvement in profitability relative to revenue.
Overall, the data suggests that the company experienced a period of volatility in profitability and sales from 2017 through 2020, followed by a strong rebound in 2021. The substantial increase in both sales and net income, coupled with a high profit margin in 2021, points to improved operational performance, possible market expansion, or cost efficiencies achieved during that year.
Return on Equity (ROE)
Steel Dynamics Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Steel Dynamics, Inc. | ||||||
| Total Steel Dynamics, Inc. equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Freeport-McMoRan Inc. | ||||||
| ROE, Industry | ||||||
| Materials | ||||||
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 2021 Calculation
ROE = 100 × Net income attributable to Steel Dynamics, Inc. ÷ Total Steel Dynamics, Inc. equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to Steel Dynamics, Inc.
- The net income exhibited significant fluctuations over the five-year period. It increased markedly from 812,741 thousand USD in 2017 to a peak of 1,258,379 thousand USD in 2018. However, the following years saw a decline, dropping to 671,103 thousand USD in 2019 and further to 550,822 thousand USD in 2020. A notable recovery occurred in 2021, with net income rising sharply to 3,214,066 thousand USD, the highest value in the period under review.
- Total Equity of Steel Dynamics, Inc.
- Total equity showed a consistent upward trend throughout the period. Starting at 3,351,574 thousand USD in 2017, equity increased steadily each year, reaching 3,935,071 thousand USD in 2018, 4,075,834 thousand USD in 2019, and 4,345,164 thousand USD in 2020. In 2021, equity experienced a more pronounced growth, rising to 6,304,641 thousand USD, indicating strengthened capital position.
- Return on Equity (ROE)
- The ROE trend closely followed the fluctuations in net income. It saw a peak of 31.98% in 2018 after starting at 24.25% in 2017. Subsequently, ROE declined to 16.47% in 2019 and further to 12.68% in 2020, mirroring the decrease in profitability. In 2021, ROE surged to an exceptional 50.98%, reflecting a substantial increase in profitability relative to equity.
- Overall Analysis
- The company demonstrated substantial growth in equity and an overall positive trajectory in financial performance by the end of the period. Despite mid-period profitability declines, the strong rebound in 2021 resulted in considerable improvements in both net income and return on equity metrics. This suggests enhanced operational efficiency or favorable market conditions contributing to a significantly improved return for shareholders in the final year analyzed.
Return on Assets (ROA)
Steel Dynamics Inc., ROA 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) | ||||||
| Net income attributable to Steel Dynamics, Inc. | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Freeport-McMoRan Inc. | ||||||
| ROA, Industry | ||||||
| Materials | ||||||
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 2021 Calculation
ROA = 100 × Net income attributable to Steel Dynamics, Inc. ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
Over the observed five-year period, several notable trends can be identified.
- Net Income
- This metric demonstrates significant variability, with an initial increase from approximately 813 million US dollars in 2017 to around 1.26 billion in 2018. Subsequently, there is a decline reaching approximately 550 million in 2020, followed by a substantial surge to over 3.2 billion in 2021. This sharp rise in the final year indicates a remarkable improvement in profitability after a period of fluctuation.
- Total Assets
- The total assets show a consistent upward trend throughout the period. Starting from roughly 6.86 billion US dollars in 2017, assets rise steadily each year, reaching over 12.5 billion by the end of 2021. This steady growth in asset base suggests ongoing expansion or accumulation of resources by the company.
- Return on Assets (ROA)
- The ROA percentage reflects the company's efficiency in using its assets to generate profit and exhibits considerable fluctuation. It peaks at 16.34% in 2018, then declines over the next two years to a low of 5.94% in 2020, followed by a marked increase to 25.65% in 2021. This pattern mirrors the income variation, highlighting a strong recovery in asset profitability in the final year.
In summary, the company experienced variable profitability with a peak in net income and ROA in 2018, a downward trend to 2020, and a pronounced recovery in 2021. Meanwhile, the asset base expanded steadily, reinforcing the company's potential for increased operational capacity and growth.