Steel Dynamics Rallies 27% YTD as Tariffs Reshape the Industry in 2025

Thinking about what to do with Steel Dynamics stock? You are definitely not alone. Whether you've been holding this name for years or just noticed its recent climb, the latest moves have caught the eye of savvy investors and newcomers alike. Let's break down what's going on and set up a deeper dive into whether this stock is a buy, hold, or something else entirely.

Steel Dynamics has seen some notable price swings over different timeframes. The past week? Up 1.1%. Over the last month, shares have gained another 4.3%, and year-to-date performance is an impressive 27.5%. Looking further out, the three-year return sits at 60.7%. If you had the foresight (or luck) to buy five years ago, your position is up a massive 376.3%. That is the kind of long-term compounding that can change a portfolio.

What is fueling these moves? Recent news from both sides of the border has kept steel stocks in focus. While Canada is dropping many U.S. tariffs, it is holding firm on 25% import taxes for U.S. steel and aluminum, potentially keeping some headwinds in place. At the same time, new rounds of U.S. tariffs on steel, aluminum, and derivatives have created a level of protection for domestic producers like Steel Dynamics. However, this also raises ongoing questions about international competition and global supply.

With all of this activity, is Steel Dynamics undervalued or has the market already priced in its potential? By traditional valuation checks, this company scores a 5 out of 6, signaling it is undervalued on most fronts. In the next section, let's break down exactly what those valuation metrics say, and preview a fresh perspective on valuation you will not want to miss at the end.

Why Steel Dynamics is lagging behind its peers

Approach 1: Steel Dynamics Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a business is worth today by projecting its future cash flows and discounting them back to the present. This approach focuses on how much free cash the company can generate, looking well beyond simple earnings.

Steel Dynamics currently produces Free Cash Flow (FCF) of $113.6 Million. According to analysts and Simply Wall St projections, this figure is expected to expand rapidly, potentially reaching around $2.76 Billion by 2035. The near-term growth is supported by five years of analyst forecasts, while subsequent years are extrapolated, with FCF growth rates tapering to a more sustainable level over the next decade.

• 2026 projected FCF: $1.95 Billion (discounted to $1.8 Billion)
• 2027 projected FCF: $2.06 Billion (discounted to $1.77 Billion)
• 2035 projected FCF: $2.76 Billion (discounted to $1.30 Billion)

Based on this outlook, the DCF model produces an intrinsic value for Steel Dynamics of $295.52 per share. With the current price reflecting a 51.7% discount to this figure, the model strongly indicates that the stock is significantly undervalued right now.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Steel Dynamics.

Our Discounted Cash Flow (DCF) analysis suggests Steel Dynamics is undervalued by 51.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Steel Dynamics Price vs Earnings

The Price-to-Earnings (PE) ratio is the go-to valuation metric for companies like Steel Dynamics that deliver consistent profits year after year. It offers investors a quick way to gauge how much they are paying for every dollar of current earnings, which is especially useful when a company generates solid and reliable profits.

The benchmark for a typical, fair PE ratio depends on several factors. Companies expecting higher growth or with lower risks often command a higher multiple, while more mature or riskier companies trade at lower valuations. Comparing Steel Dynamics, its current PE ratio is 20.2x. That is below both the industry average of 25.3x and the Metals and Mining peer group average of 32.4x, suggesting the market may not be fully recognizing its earnings power.

This is where Simply Wall St’s “Fair Ratio” comes in. The Fair Ratio is a proprietary calculation that estimates the most appropriate PE multiple for Steel Dynamics, given factors like its future earnings growth, profit margins, industry norms, company size, and business risks. Unlike a straight industry or peer average, this tailored approach provides a fairer and more nuanced benchmark.

Steel Dynamics’ Fair Ratio sits at 32.5x, well above both its current PE and the industry average. This sizable gap suggests the market is undervaluing Steel Dynamics’ earnings relative to what it deserves based on its fundamentals. If you believe the Fair Ratio appropriately reflects the company’s profile, current pricing offers a potential opportunity.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Steel Dynamics Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. This is the most dynamic way to shape your investment view. A Narrative is your personal story about a company, combining your perspective on its future (like growth drivers, risks, and margins) with your own financial forecasts, resulting in your estimated fair value. Narratives create a living link between what is happening with Steel Dynamics, your own analysis of future earnings or revenue, and what you think the stock should actually be worth. This approach moves beyond static ratios and lets you put numbers to your beliefs.

This tool is available and easy to use on Simply Wall St’s Community page, where millions of investors share and update their Narratives as new information arrives, whether it is news, earnings reports, or changes in industry dynamics. Narratives help you decide when to buy or sell by constantly comparing your fair value to the current price, enabling quicker, more informed decisions. For example, today some investors believe domestic manufacturing booms and low-carbon leadership will drive margins and push Steel Dynamics’ value as high as $151.50. Others see headwinds and estimate a much lower fair value around $130. Both stories are updated live as events unfold.

Do you think there's more to the story for Steel Dynamics? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com