STLD Q4 Earnings: A Tactical Reset or a Setup for a Rebound?

The upcoming January 26th earnings report is a classic event-driven catalyst. Steel Dynamics has set the stage with a stark warning: its fourth-quarter profit will plunge. The company guided EPS to a range of $1.65 to $1.69 per diluted share, a ~40% sequential decline from the $2.74 per diluted share it posted in the third quarter. This is a clear operational reset, but the magnitude is a shock against consensus.

Analysts were expecting a profit of $2.05 per share for the quarter. The guidance gap is substantial, with the midpoint of STLD's range sitting well below that forecast. The company cited two primary reasons: lower average realized selling values due to a steep drop in steel prices over the summer, and lower volumes related to both seasonal demand and planned maintenance outages that were longer than expected. This creates a tactical setup where the event's outcome will define the near-term path.

The stock will report before the market opens on Monday, January 26, 2026, with a call hosted by CEO Mark D. Millett at 11:00 a.m. EST. The thesis is straightforward. The ~40% sequential earnings drop is a known seasonal and operational reset, but the context of weak steel prices is the real variable. A beat on this guidance would signal that the price recovery is stronger and more durable than feared, potentially sparking a re-rating. A miss, however, would confirm that the slowdown is deeper and more prolonged, likely triggering a sell-off. This event is the immediate catalyst that will test the market's patience with the company's cyclical trajectory.

The Mechanics: Price Pressure and Production Headwinds

The guidance shock is rooted in two tangible, sequential hits. The first is a lagging price effect. Average hot rolled steel prices fell over $70 per ton from July to October. Since STLD sells much of its flat rolled steel on a lagging indexed basis, that drop directly reduced the selling value for Q4 production. This creates a mechanical drag: the company is being paid less for steel it made in the summer, even as prices have since improved. The second hit is operational. Planned maintenance outages at its flat rolled mills were longer than expected, cutting production by an estimated 140,000 to 150,000 tons. That volume loss compounds the problem, hitting both revenue and the ability to spread fixed costs.

This sequence highlights the volatility of the input. Just three months before this Q4 reset, the company was riding a wave of price strength. In the third quarter alone, the average mill price for a W14x68 steel beam rose 6%. The guidance now shows the flip side: a steep price decline followed by a production shortfall. The maintenance delay is a known operational hiccup, but the price drop is a broader market signal. The company notes that prices have improved recently due to declining import volumes and steady demand, which is a positive note for the outlook. Yet for the quarter that just ended, these two factors-the lagging price impact and the unplanned downtime-created a clear and material headwind to profitability.

The Valuation Setup: Rally vs. Reality

The stock's recent run creates a classic event-driven tension. Shares are up 28% over the last 120 days and 45.7% over the last year, a surge that has significantly outpaced the broader market. This rally priced in a strong cyclical recovery, but the upcoming guidance shocks that narrative. The company expects full-year 2025 EPS to be down 16% year-over-year, a stark contrast to the 50.7% growth expected for Q4. This disconnect is the core of the setup.

Viewed through a tactical lens, the recent price action may have created a mispricing opportunity, but it hinges entirely on the Q4 beat. The stock's 45% annual gain suggests the market has already discounted a robust price recovery and volume rebound. The guidance now implies a sharp deceleration in profitability for the quarter just ended, testing whether that rally was based on reality or anticipation. If the company beats the lowered guidance, it would confirm that the price recovery is stronger and more durable than feared, potentially validating the rally and sparking a re-rating. A miss, however, would confirm that the slowdown is deeper and more prolonged, likely triggering a sell-off as the stock's valuation resets to a lower earnings base.

The valuation metrics themselves are elevated relative to the current earnings trajectory. The stock trades at a forward P/E of nearly 24, which is high for a company facing a sequential earnings plunge. This premium reflects the market's bet on a cyclical upturn, but the guidance now forces a near-term reality check. The tactical play is clear: the event will determine if the rally was premature or if it simply got ahead of the story. The setup favors a wait-and-see stance until the January 26th report provides the missing piece of the puzzle.

Catalysts and Risks: What to Watch on the Call

The immediate post-earnings scenarios are binary. The stock's next move hinges on two key data points: the actual Q4 EPS and the full-year 2025 guidance. Management must deliver results that meet or exceed the company's own $1.65 to $1.69 per diluted share range. A result at the high end of that range, or better, would be a tactical win. It would signal that the operational headwinds-particularly the lagging price impact and maintenance delays-were contained. A miss, especially falling below the low end of guidance, would confirm that the slowdown is deeper than feared and likely trigger a sharp re-rating after its strong run.

Beyond the numbers, the call will test the sustainability narrative. Management must provide clarity on the recent price improvement. The company noted that flat rolled steel prices have improved due to declining import volumes and steady demand. Investors need to hear whether this is a durable trend or a seasonal blip. Any commentary suggesting the price recovery is fragile or that import volumes are rebounding would be a major red flag. The timing of the next price cycle is the critical variable for the 2026 outlook.

The key risk is a cautious 2026 guidance. Analysts expect EPS to rise 63.6% year over year to $13.53 in fiscal 2026, a massive jump from the expected 2025 decline. If management provides a 2026 outlook that is below this consensus, it would shatter the market's high-growth bet. This is the setup for a sell-off: a stock that has rallied nearly 50% over the past year faces a guidance reset that could quickly reverse those gains. The tactical play is to watch for any deviation from the bullish trajectory baked into the current valuation.