Steel Dynamics: Strategic BlueScope Acquisition, Manageable Leverage, and 2026 Cash Flow Inflection Underpin Buy Rating

Bank of America Securities analyst Lawson Winder has maintained their bullish stance on STLD stock, giving a Buy rating on December 25.

Lawson Winder has given his Buy rating due to a combination of factors that highlight both strategic and financial upside for Steel Dynamics. He views the proposed acquisition of BlueScope’s North American assets as an opportunity for STLD to add a large, high-quality electric arc furnace operation and related businesses at a valuation below where North American steel peers and STLD itself trade on 2026 EBITDA multiples. The North American portfolio, including the North Star mill in Ohio, is expected to contribute the majority of BlueScope’s future earnings and is likely more valuable than its Australia/Asia Pacific operations, reinforcing the logic of STLD focusing solely on this regional segment. Winder also argues that the deal would enhance STLD’s competitive position in the U.S. Midwest and strengthen its presence in key end-markets such as automotive and construction, where demand visibility and margins can be attractive.
At the same time, Winder believes STLD has the balance sheet strength to fund the transaction while keeping leverage at levels he characterizes as elevated but still manageable, with net debt to EBITDA ratios remaining within a reasonable range under both his base-case and spot steel price assumptions. He underscores that geographic proximity between North Star and STLD’s Butler mill in Indiana, along with STLD’s leadership in coated steel, should create meaningful operational and commercial synergies, especially as STLD pushes further into automotive. Finally, he anticipates a turn in free cash flow beginning in 2026 that could enable significant capital returns to shareholders, reinforcing the total return case at a share price below his $185 price objective. Taken together, these strategic benefits, manageable leverage metrics, and an improving cash flow outlook underpin his Buy recommendation on STLD.

In another report released on December 25, TipRanks – OpenAI also reiterated a Buy rating on the stock with a $201.00 price target.