What Do Tariff Changes Mean for Steel Dynamics Stock in 2025?

If you’re reading this, you probably have Steel Dynamics on your radar and are weighing whether now is the moment to buy, hold, or reconsider your position. It’s a fair question, especially after what’s been happening with the stock. Over the past year, shares have climbed 15.0%, but that’s just part of the bigger picture. Year-to-date, the return is an eye-catching 29.0%. Over three years, Steel Dynamics is up nearly 96%. If you’re a long-term holder, you’ve seen a massive 378.0% return in the last five years. These numbers naturally make investors curious about what’s coming next.

Much of this momentum stems from the company’s ability to navigate a flurry of shifting international tariffs and market challenges. Recent developments, like Canada’s decision to drop many U.S. tariffs but keep the 25% tax on American steel, have created both hurdles and protection, fueling market debate around future demand and risk. When you add in ongoing U.S. tariff moves and concerns over global overproduction, you can see why investors are getting mixed signals. Even so, the market’s verdict remains overwhelmingly positive.

But impressive share gains aren’t the whole story. By digging into the numbers, Steel Dynamics currently scores a 5 out of 6 according to our valuation checks. This is clear evidence that the company is undervalued in the vast majority of standard measures. That raises the obvious question: how should you interpret this strong value signal? Let’s look at the different valuation approaches most investors rely on. Later, we’ll get to a smarter way to judge true value in Steel Dynamics stock.

Why Steel Dynamics is lagging behind its peers

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

The Discounted Cash Flow, or DCF, model is a valuation tool that estimates a company's true worth based on the future cash flows it can generate, projected into the coming years and discounted back to today's dollars. This method allows investors to assess whether a stock's price reflects the business's underlying cash-generating potential.

For Steel Dynamics, the current Free Cash Flow stands at $113.6 Million. According to analysts, this number is expected to grow steadily, with projections reaching $2.19 Billion by 2027 and climbing even higher in later years through a combination of analyst input and extended forecasts. Over the next decade, these projections anticipate Free Cash Flow climbing above $3 Billion, as calculated and extrapolated by Simply Wall St.

Tallying all future cash flows and discounting them, the model arrives at an intrinsic value of $328.37 per share for Steel Dynamics. Compared to the current stock price, this implies that shares are trading at a 56.0% discount to fair value, making the stock appear meaningfully undervalued using this approach.

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 56.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Steel Dynamics Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a go-to tool for evaluating profitable companies like Steel Dynamics because it links the company’s current share price to its per-share earnings, capturing what investors are paying today for a slice of future profits. For established businesses generating strong earnings, this multiple is often the most telling gauge of whether shares are fairly valued.

However, determining what counts as a “normal” or “fair” PE ratio depends on a company’s expected growth and risk profile. Firms with strong, consistent earnings growth and fewer risks can often support a higher PE, while businesses facing uncertainty might warrant a lower multiple.

Steel Dynamics is currently trading at a PE of 20.4x. When you stack this up against the Metals and Mining industry average of 24.7x and a peer group average of 64.0x, Steel Dynamics looks relatively inexpensive. However, rather than relying solely on industry and peer averages, it is helpful to look at the “Fair Ratio.”

The “Fair Ratio” is Simply Wall St’s proprietary estimate of what PE the market should assign, factoring in company-specific drivers like future earnings growth, profit margins, risks, industry trends, and market cap. This makes it a more individualized and forward-looking benchmark compared to the blunt comparison with peers or sector norms.

For Steel Dynamics, the Fair Ratio sits at 33.6x. This means the company’s current valuation is well below what you would expect, based on its own fundamentals and growth outlook. This suggests the stock appears undervalued using the PE approach and reinforces the positive signal seen in the DCF model.

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. Narratives are Simply Wall St’s tool for bringing your personal perspective into the investment process. They help you tell the story behind the numbers by connecting your view of a company's future (such as expected revenue, earnings and margins) to a financial forecast and a fair value estimate.

This approach allows you to explicitly link your beliefs about Steel Dynamics, or any company, to a dynamic estimate of what you think the stock is worth. This makes the rationale for every investment decision clear and actionable. Narratives are easy to use and accessible to everyone in the Community page, where millions of investors share, update and compare their perspectives in real time.

As new information (like earnings or news) comes in, Narratives are automatically refreshed. This means you can quickly see how the fair value and story change, putting you in control of buy, hold, or sell decisions by showing how your fair value compares to the current price.

For example, some investors expect Steel Dynamics to reach a fair value of $149.58 with robust profit growth and resilient margins, while others see more muted prospects and set fair value much lower.

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.

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