Intrinsic value of Steel Dynamics - STLD

Previous Close

$40.00

  Intrinsic Value

$189.62

stock screener

  Rating & Target

str. buy

+374%

Previous close

$40.00

 
Intrinsic value

$189.62

 
Up/down potential

+374%

 
Rating

str. buy

We calculate the intrinsic value of STLD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 9.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  29.30
  26.87
  24.68
  22.71
  20.94
  19.35
  17.91
  16.62
  15.46
  14.41
  13.47
  12.63
  11.86
  11.18
  10.56
  10.00
  9.50
  9.05
  8.65
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
Revenue, $m
  12,334
  15,648
  19,510
  23,942
  28,956
  34,559
  40,749
  47,523
  54,870
  62,779
  71,237
  80,232
  89,750
  99,781
  110,316
  121,352
  132,883
  144,913
  157,444
  170,484
  184,045
  198,141
  212,789
  228,012
  243,832
  260,277
  277,378
  295,166
  313,678
  332,952
Variable operating expenses, $m
  9,947
  12,602
  15,697
  19,248
  23,265
  27,754
  32,715
  38,142
  44,029
  50,366
  57,079
  64,286
  71,912
  79,949
  88,391
  97,233
  106,473
  116,111
  126,152
  136,601
  147,466
  158,761
  170,498
  182,695
  195,371
  208,547
  222,249
  236,502
  251,335
  266,778
Fixed operating expenses, $m
  803
  821
  839
  857
  876
  896
  915
  935
  956
  977
  999
  1,021
  1,043
  1,066
  1,089
  1,113
  1,138
  1,163
  1,188
  1,215
  1,241
  1,269
  1,297
  1,325
  1,354
  1,384
  1,414
  1,446
  1,477
  1,510
Total operating expenses, $m
  10,750
  13,423
  16,536
  20,105
  24,141
  28,650
  33,630
  39,077
  44,985
  51,343
  58,078
  65,307
  72,955
  81,015
  89,480
  98,346
  107,611
  117,274
  127,340
  137,816
  148,707
  160,030
  171,795
  184,020
  196,725
  209,931
  223,663
  237,948
  252,812
  268,288
Operating income, $m
  1,584
  2,225
  2,974
  3,837
  4,814
  5,908
  7,119
  8,445
  9,885
  11,436
  13,160
  14,925
  16,795
  18,765
  20,836
  23,005
  25,273
  27,638
  30,103
  32,669
  35,337
  38,112
  40,995
  43,992
  47,107
  50,346
  53,714
  57,218
  60,866
  64,664
EBITDA, $m
  1,998
  2,734
  3,593
  4,581
  5,701
  6,955
  8,341
  9,860
  11,508
  13,284
  15,183
  17,205
  19,344
  21,600
  23,970
  26,452
  29,047
  31,755
  34,576
  37,512
  40,566
  43,740
  47,040
  50,469
  54,034
  57,740
  61,594
  65,603
  69,777
  74,122
Interest expense (income), $m
  151
  136
  194
  262
  343
  435
  539
  655
  783
  924
  1,076
  1,241
  1,416
  1,603
  1,800
  2,008
  2,227
  2,456
  2,695
  2,945
  3,205
  3,476
  3,757
  4,050
  4,354
  4,670
  4,998
  5,339
  5,694
  6,063
  6,447
Earnings before tax, $m
  1,448
  2,031
  2,712
  3,494
  4,380
  5,370
  6,464
  7,662
  8,961
  10,360
  11,919
  13,509
  15,192
  16,965
  18,828
  20,778
  22,817
  24,943
  27,158
  29,464
  31,862
  34,355
  36,946
  39,638
  42,438
  45,348
  48,375
  51,524
  54,803
  58,217
Tax expense, $m
  391
  548
  732
  943
  1,183
  1,450
  1,745
  2,069
  2,419
  2,797
  3,218
  3,648
  4,102
  4,581
  5,083
  5,610
  6,160
  6,735
  7,333
  7,955
  8,603
  9,276
  9,975
  10,702
  11,458
  12,244
  13,061
  13,912
  14,797
  15,719
Net income, $m
  1,057
  1,483
  1,980
  2,551
  3,197
  3,920
  4,719
  5,593
  6,542
  7,562
  8,701
  9,862
  11,090
  12,385
  13,744
  15,168
  16,656
  18,208
  19,826
  21,509
  23,259
  25,079
  26,970
  28,936
  30,980
  33,104
  35,314
  37,613
  40,006
  42,498

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  8,619
  10,935
  13,634
  16,731
  20,235
  24,150
  28,476
  33,210
  38,344
  43,871
  49,782
  56,067
  62,718
  69,728
  77,090
  84,802
  92,861
  101,267
  110,024
  119,136
  128,613
  138,463
  148,700
  159,337
  170,393
  181,885
  193,835
  206,265
  219,202
  232,671
Adjusted assets (=assets-cash), $m
  8,619
  10,935
  13,634
  16,731
  20,235
  24,150
  28,476
  33,210
  38,344
  43,871
  49,782
  56,067
  62,718
  69,728
  77,090
  84,802
  92,861
  101,267
  110,024
  119,136
  128,613
  138,463
  148,700
  159,337
  170,393
  181,885
  193,835
  206,265
  219,202
  232,671
Revenue / Adjusted assets
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
  1.431
Average production assets, $m
  3,959
  5,023
  6,263
  7,685
  9,295
  11,093
  13,081
  15,255
  17,613
  20,152
  22,867
  25,754
  28,810
  32,030
  35,412
  38,954
  42,656
  46,517
  50,539
  54,725
  59,078
  63,603
  68,305
  73,192
  78,270
  83,549
  89,038
  94,748
  100,691
  106,878
Working capital, $m
  2,121
  2,691
  3,356
  4,118
  4,980
  5,944
  7,009
  8,174
  9,438
  10,798
  12,253
  13,800
  15,437
  17,162
  18,974
  20,872
  22,856
  24,925
  27,080
  29,323
  31,656
  34,080
  36,600
  39,218
  41,939
  44,768
  47,709
  50,769
  53,953
  57,268
Total debt, $m
  3,397
  4,604
  6,010
  7,623
  9,449
  11,489
  13,743
  16,209
  18,884
  21,763
  24,843
  28,117
  31,583
  35,235
  39,071
  43,088
  47,287
  51,667
  56,229
  60,977
  65,914
  71,046
  76,379
  81,921
  87,681
  93,669
  99,894
  106,371
  113,111
  120,128
Total liabilities, $m
  4,490
  5,697
  7,103
  8,717
  10,542
  12,582
  14,836
  17,302
  19,977
  22,857
  25,936
  29,211
  32,676
  36,328
  40,164
  44,182
  48,380
  52,760
  57,322
  62,070
  67,007
  72,139
  77,473
  83,015
  88,775
  94,762
  100,988
  107,464
  114,204
  121,222
Total equity, $m
  4,128
  5,238
  6,531
  8,014
  9,692
  11,568
  13,640
  15,907
  18,367
  21,014
  23,845
  26,856
  30,042
  33,400
  36,926
  40,620
  44,480
  48,507
  52,701
  57,066
  61,606
  66,324
  71,227
  76,323
  81,618
  87,123
  92,847
  98,801
  104,998
  111,449
Total liabilities and equity, $m
  8,618
  10,935
  13,634
  16,731
  20,234
  24,150
  28,476
  33,209
  38,344
  43,871
  49,781
  56,067
  62,718
  69,728
  77,090
  84,802
  92,860
  101,267
  110,023
  119,136
  128,613
  138,463
  148,700
  159,338
  170,393
  181,885
  193,835
  206,265
  219,202
  232,671
Debt-to-equity ratio
  0.820
  0.880
  0.920
  0.950
  0.970
  0.990
  1.010
  1.020
  1.030
  1.040
  1.040
  1.050
  1.050
  1.050
  1.060
  1.060
  1.060
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.080
  1.080
  1.080
  1.080
  1.080
Adjusted equity ratio
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,057
  1,483
  1,980
  2,551
  3,197
  3,920
  4,719
  5,593
  6,542
  7,562
  8,701
  9,862
  11,090
  12,385
  13,744
  15,168
  16,656
  18,208
  19,826
  21,509
  23,259
  25,079
  26,970
  28,936
  30,980
  33,104
  35,314
  37,613
  40,006
  42,498
Depreciation, amort., depletion, $m
  415
  509
  619
  744
  887
  1,046
  1,222
  1,414
  1,623
  1,848
  2,024
  2,279
  2,550
  2,834
  3,134
  3,447
  3,775
  4,117
  4,473
  4,843
  5,228
  5,629
  6,045
  6,477
  6,927
  7,394
  7,879
  8,385
  8,911
  9,458
Funds from operations, $m
  1,472
  1,992
  2,598
  3,295
  4,084
  4,966
  5,941
  7,008
  8,165
  9,410
  10,725
  12,141
  13,640
  15,219
  16,878
  18,615
  20,431
  22,325
  24,298
  26,352
  28,487
  30,707
  33,015
  35,413
  37,906
  40,498
  43,193
  45,998
  48,917
  51,956
Change in working capital, $m
  481
  570
  664
  762
  862
  964
  1,065
  1,165
  1,264
  1,360
  1,455
  1,547
  1,637
  1,725
  1,812
  1,898
  1,983
  2,069
  2,155
  2,243
  2,332
  2,424
  2,520
  2,618
  2,721
  2,829
  2,941
  3,060
  3,184
  3,315
Cash from operations, $m
  991
  1,421
  1,934
  2,533
  3,222
  4,002
  4,876
  5,843
  6,901
  8,050
  9,270
  10,594
  12,003
  13,494
  15,066
  16,717
  18,447
  20,256
  22,143
  24,109
  26,155
  28,283
  30,495
  32,795
  35,185
  37,669
  40,252
  42,938
  45,733
  48,641
Maintenance CAPEX, $m
  -271
  -350
  -445
  -554
  -680
  -823
  -982
  -1,158
  -1,350
  -1,559
  -1,783
  -2,024
  -2,279
  -2,550
  -2,834
  -3,134
  -3,447
  -3,775
  -4,117
  -4,473
  -4,843
  -5,228
  -5,629
  -6,045
  -6,477
  -6,927
  -7,394
  -7,879
  -8,385
  -8,911
New CAPEX, $m
  -897
  -1,064
  -1,240
  -1,423
  -1,610
  -1,798
  -1,987
  -2,174
  -2,358
  -2,539
  -2,715
  -2,887
  -3,055
  -3,220
  -3,382
  -3,542
  -3,702
  -3,861
  -4,022
  -4,186
  -4,353
  -4,525
  -4,702
  -4,886
  -5,078
  -5,279
  -5,489
  -5,710
  -5,942
  -6,187
Cash from investing activities, $m
  -1,168
  -1,414
  -1,685
  -1,977
  -2,290
  -2,621
  -2,969
  -3,332
  -3,708
  -4,098
  -4,498
  -4,911
  -5,334
  -5,770
  -6,216
  -6,676
  -7,149
  -7,636
  -8,139
  -8,659
  -9,196
  -9,753
  -10,331
  -10,931
  -11,555
  -12,206
  -12,883
  -13,589
  -14,327
  -15,098
Free cash flow, $m
  -177
  7
  250
  556
  932
  1,381
  1,907
  2,511
  3,192
  3,952
  4,771
  5,683
  6,668
  7,724
  8,849
  10,041
  11,299
  12,620
  14,004
  15,450
  16,959
  18,530
  20,165
  21,864
  23,630
  25,464
  27,369
  29,348
  31,405
  33,544
Issuance/(repayment) of debt, $m
  1,015
  1,207
  1,406
  1,613
  1,826
  2,040
  2,254
  2,466
  2,675
  2,880
  3,079
  3,275
  3,465
  3,652
  3,836
  4,018
  4,199
  4,380
  4,562
  4,748
  4,937
  5,132
  5,333
  5,542
  5,760
  5,987
  6,226
  6,476
  6,740
  7,017
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,015
  1,207
  1,406
  1,613
  1,826
  2,040
  2,254
  2,466
  2,675
  2,880
  3,079
  3,275
  3,465
  3,652
  3,836
  4,018
  4,199
  4,380
  4,562
  4,748
  4,937
  5,132
  5,333
  5,542
  5,760
  5,987
  6,226
  6,476
  6,740
  7,017
Total cash flow (excl. dividends), $m
  838
  1,214
  1,656
  2,170
  2,758
  3,421
  4,161
  4,977
  5,867
  6,832
  7,851
  8,958
  10,133
  11,376
  12,685
  14,059
  15,497
  16,999
  18,566
  20,198
  21,896
  23,662
  25,498
  27,406
  29,389
  31,451
  33,595
  35,825
  38,145
  40,561
Retained Cash Flow (-), $m
  -937
  -1,109
  -1,293
  -1,483
  -1,678
  -1,875
  -2,072
  -2,267
  -2,459
  -2,647
  -2,831
  -3,011
  -3,186
  -3,358
  -3,527
  -3,694
  -3,860
  -4,027
  -4,195
  -4,365
  -4,539
  -4,718
  -4,903
  -5,095
  -5,296
  -5,505
  -5,724
  -5,954
  -6,197
  -6,452
Prev. year cash balance distribution, $m
  160
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  61
  105
  363
  686
  1,079
  1,546
  2,089
  2,709
  3,408
  4,184
  5,020
  5,947
  6,948
  8,019
  9,158
  10,365
  11,637
  12,973
  14,372
  15,833
  17,357
  18,944
  20,595
  22,311
  24,094
  25,946
  27,871
  29,871
  31,949
  34,109
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  58
  96
  316
  565
  836
  1,122
  1,411
  1,693
  1,958
  2,194
  2,384
  2,538
  2,642
  2,692
  2,689
  2,634
  2,532
  2,389
  2,213
  2,012
  1,795
  1,572
  1,350
  1,136
  937
  757
  598
  462
  349
  257
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Steel Dynamics, Inc. is a steel producing and a metal recycling company. The Company is engaged in the manufacture and sale of steel products, processing and sale of recycled ferrous and nonferrous metals, and fabrication and sale of steel joists and deck products. Its segments include steel operations, metals recycling operations, steel fabrication operations and Other Operations. It offers a range of steel products, such as sheet products, long products and steel finishing. The steel operations segment includes Butler Flat Roll Division, Columbus Flat Roll Division, The Techs galvanizing lines, Structural and Rail Division, Engineered Bar Products Division, Roanoke Bar Division, Steel of West Virginia and Iron Dynamics. The metals recycling operations segment consists of OmniSource Corporation. The fabrication operations produce steel building components. The Other Operations segment consists of subsidiary operations and smaller joint ventures.

FINANCIAL RATIOS  of  Steel Dynamics (STLD)

Valuation Ratios
P/E Ratio 25.5
Price to Sales 1.3
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 11.4
Price to Free Cash Flow 14.9
Growth Rates
Sales Growth Rate 2.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 72.2%
Cap. Spend. - 3 Yr. Gr. Rate 1.1%
Financial Strength
Quick Ratio 211
Current Ratio 0.1
LT Debt to Equity 80.4%
Total Debt to Equity 80.5%
Interest Coverage 5
Management Effectiveness
Return On Assets 7.6%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital 7.2%
Ret/ On T. Cap. - 3 Yr. Avg. 2.6%
Return On Equity 13.6%
Return On Equity - 3 Yr. Avg. 4.9%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 17.2%
Gross Margin - 3 Yr. Avg. 12.6%
EBITDA Margin 13%
EBITDA Margin - 3 Yr. Avg. 7.3%
Operating Margin 9.4%
Oper. Margin - 3 Yr. Avg. 4%
Pre-Tax Margin 7.3%
Pre-Tax Margin - 3 Yr. Avg. 2%
Net Profit Margin 4.9%
Net Profit Margin - 3 Yr. Avg. 1.7%
Effective Tax Rate 36.2%
Eff/ Tax Rate - 3 Yr. Avg. 40.2%
Payout Ratio 35.6%

STLD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the STLD stock intrinsic value calculation we used $9538.797 million for the last fiscal year's total revenue generated by Steel Dynamics. The default revenue input number comes from 0001 income statement of Steel Dynamics. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our STLD stock valuation model: a) initial revenue growth rate of 29.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for STLD is calculated based on our internal credit rating of Steel Dynamics, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Steel Dynamics.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of STLD stock the variable cost ratio is equal to 80.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $786 million in the base year in the intrinsic value calculation for STLD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.7% for Steel Dynamics.

Corporate tax rate of 27% is the nominal tax rate for Steel Dynamics. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the STLD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for STLD are equal to 32.1%.

Life of production assets of 11.3 years is the average useful life of capital assets used in Steel Dynamics operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for STLD is equal to 17.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3351.574 million for Steel Dynamics - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 235.934 million for Steel Dynamics is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Steel Dynamics at the current share price and the inputted number of shares is $9.4 billion.

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