Critical Survey: SSAB (OTCMKTS:SSAAY) & Steel Dynamics (NASDAQ:STLD)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
SSAB	4.99%	7.30%	4.68%
Steel Dynamics	6.80%	13.26%	7.60%

Insider & Institutional Ownership

82.4% of Steel Dynamics shares are held by institutional investors. 6.3% of Steel Dynamics shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

SSAB has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500. Comparatively, Steel Dynamics has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500.

Dividends

SSAB pays an annual dividend of $0.09 per share and has a dividend yield of 2.8%. Steel Dynamics pays an annual dividend of $2.00 per share and has a dividend yield of 1.5%. SSAB pays out 39.1% of its earnings in the form of a dividend. Steel Dynamics pays out 26.4% 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 raised its dividend for 13 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for SSAB and Steel Dynamics, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SSAB	0	2	0	0	2.00
Steel Dynamics	0	3	8	0	2.73

Steel Dynamics has a consensus target price of $148.00, suggesting a potential upside of 8.76%. Given Steel Dynamics’ stronger consensus rating and higher probable upside, analysts clearly believe Steel Dynamics is more favorable than SSAB.

Valuation & Earnings

This table compares SSAB and Steel Dynamics”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SSAB	$9.78 billion	0.65	$617.08 million	$0.23	13.83
Steel Dynamics	$17.54 billion	1.15	$1.54 billion	$7.57	17.98

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

Summary

Steel Dynamics beats SSAB on 16 of the 17 factors compared between the two stocks.

About SSAB

SSAB AB (publ) produces and sells steel products in Sweden, Finland, Rest of Europe, the United States, and internationally. It operates through five segments: SSAB Special Steels, SSAB Europe, SSAB Americas, Tibnor, and Ruukki Construction. The SSAB Special Steels segment offers quenched and tempered steels, and advanced high-strength steel products for steel and plate production. The SSAB Europe segment provides strip, heavy plate, and tubular products. The SSAB Americas segment sells heavy plates for steel and plate production. The Tibnor segment distributes a range of steel and non-ferrous metals in the Nordics and Baltics. The Ruukki Construction segment produces and sells energy-efficient building and construction solutions. It markets its steel products under the Strenx, Hardox, Docol, GreenCoat, Toolox, Armox, Duroxite, SSAB AM, SSAB Boron, SSAB Domex, SSAB Form, SSAB Laser, SSAB Weathering, Cor-Ten, and SSAB Multisteel brands. The company's products are used by customers in the heavy transport, construction and infrastructure, industrial applications, construction machinery, energy, and material handling markets. SSAB AB (publ) was founded in 1878 and is headquartered in Stockholm, Sweden.

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.