Steel Dynamics: Near-Term EPS Softness Masking 2026 Volume Upside, FCF Inflection and Enhanced Capital Returns Justify Buy Rating

Bank of America Securities analyst Lawson Winder has maintained their bullish stance on STLD stock, giving a Buy rating yesterday.

Lawson Winder has given his Buy rating due to a combination of factors that, in his view, outweigh the near-term earnings softness. While Steel Dynamics’ Q4 2025 EPS guidance came in below both consensus and prior BofA estimates, he attributes this primarily to temporary issues such as lagged sheet pricing, planned maintenance outages, and associated volume cuts. He expects the company to benefit as recently higher flat-rolled steel prices feed into realized results, supported by seasonally steady end-market demand and fabrication backlogs that extend well into 2026 at attractive price levels.

In addition, Winder highlights structural drivers that support stronger performance and shareholder returns beyond the current quarter. Management anticipates that lower interest rates and ongoing U.S. infrastructure and onshoring trends will lift mill and fabrication volumes in 2026. The new aluminum rolling mill is ramping well, with key customer qualifications in beverage can and automotive applications and a path to positive EBITDA before the end of 2025. Coupled with a sizable step-down in capital expenditures and already-aggressive capital returns via buybacks and dividends, he sees a significant inflection in free cash flow and an opportunity for enhanced capital return, justifying a Buy rating and a price objective above the current share price.

According to TipRanks, Winder is a 5-star analyst with an average return of 16.9% and a 59.62% success rate. Winder covers the Basic Materials sector, focusing on stocks such as Pan American Silver, Eldorado Gold, and Freeport-McMoRan.

In another report released yesterday, Morgan Stanley also maintained a Buy rating on the stock with a $173.00 price target.