Steel Dynamics (NASDAQ:STLD) & Outokumpu (OTCMKTS:OUTKY) Head-To-Head Contrast

Steel Dynamics (NASDAQ:STLD) and Outokumpu (OTCMKTS:OUTKY) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Valuation and Earnings

This table compares Steel Dynamics and Outokumpu”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Steel Dynamics	$17.54 billion	1.22	$1.54 billion	$6.86	21.22
Outokumpu	$6.43 billion	0.33	-$43.28 million	($0.05)	-45.40

Steel Dynamics has higher revenue and earnings than Outokumpu. Outokumpu is trading at a lower price-to-earnings ratio than Steel Dynamics, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

82.4% of Steel Dynamics shares are held by institutional investors. 6.3% of Steel Dynamics shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Steel Dynamics and Outokumpu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Steel Dynamics	6.07%	11.88%	6.71%
Outokumpu	-0.82%	-1.33%	-0.82%

Volatility and Risk

Steel Dynamics has a beta of 1.4, meaning that its share price is 40% more volatile than the S&P 500. Comparatively, Outokumpu has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Steel Dynamics and Outokumpu, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Steel Dynamics	0	4	8	0	2.67
Outokumpu	2	1	1	0	1.75

Steel Dynamics presently has a consensus target price of $149.89, suggesting a potential upside of 2.99%. Given Steel Dynamics’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Steel Dynamics is more favorable than Outokumpu.

Dividends

Steel Dynamics pays an annual dividend of $2.00 per share and has a dividend yield of 1.4%. Outokumpu pays an annual dividend of $0.04 per share and has a dividend yield of 1.8%. Steel Dynamics pays out 29.2% of its earnings in the form of a dividend. Outokumpu pays out -80.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Steel Dynamics has increased its dividend for 13 consecutive years. Outokumpu is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Steel Dynamics beats Outokumpu on 15 of the 17 factors compared between the two stocks.

About Steel Dynamics

Steel Dynamics, Inc., together with its subsidiaries, operates as a steel producer and metal recycler in the United States. The Steel Operations segment offers hot rolled, cold rolled, and coated steel products; parallel flange beams and channel sections, flat bars, large unequal leg angles, and reinforcing steel bars, as well as standard strength carbon, intermediate alloy hardness, and premium grade rail products; engineered special-bar-quality products, merchant-bar-quality products, and other engineered round steel bars; channels, angles, flats, merchant rounds, and reinforcing steel bars; and specialty shapes and light structural steel products. This segment also engages in turning, polishing, straightening, chamfering, precision saw-cutting, and heat treating of bar products. Its products are used in construction, automotive, manufacturing, transportation, heavy and agriculture equipment, and pipe and tube markets. The Metals Recycling Operations segment is involved in the ferrous and nonferrous scrap metal processing, transportation, marketing, brokerage, and scrap management services. Its ferrous products include heavy melting steel, busheling, bundled scrap, shredded scrap, steel turnings, and cast-iron products; and nonferrous products comprise aluminum, brass, copper, stainless steel, and other nonferrous metals. The Steel Fabrication Operations segment produces steel non-residential building components, such as steel joists, girders, trusses, and steel deck products for non-residential steel fabricators, metal building companies, general construction contractors, developers, owners, brokers, and governmental entities, as well as e-commerce warehouses, data centers, metal buildings, and education and commercial building projects. The Aluminum Operations segment offers recycled aluminum flat rolled products. The company also exports its products. Steel Dynamics, Inc. was founded in 1993 and is headquartered in Fort Wayne, Indiana.

About Outokumpu

Outokumpu Oyj produces and sells various stainless steel products in Finland, other European countries, North America, the Asia-Pacific, and internationally. The company operates through three segments: Europe, Americas, and Ferrochrome. It offers cold rolled coils, strips, and sheets; hot rolled coils, strips, and plates; quarto plates; precision strips; and specialized components, such as welded stainless-steel I-beams, H-beams, hollow-section tubes, bent profiles, structural sections, hardened and customized press plates, suction roll shells, and blancs and disks. The company also provides stainless steel powder which includes Supra 316L, Dura 17-4PH, Ultra 904L, Therma 253MA, Dura 4116, and Ni-free austenitic stainless steel powder; and nickel-based alloys. Its products are used in various applications, including commercial kitchen, cooking, food industry, and home appliances; automotive and transportation; building and infrastructure; energy; marine; and heavy industries. The company was founded in 1910 and is headquartered in Helsinki, Finland.