Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
Steel Dynamics Inc., current price multiples
| Steel Dynamics Inc. | Freeport-McMoRan Inc. | Materials | |||
|---|---|---|---|---|---|
| Selected Financial Data | |||||
| Current share price (P) | $98.04 | ||||
| No. shares of common stock outstanding | 175,571,409 | ||||
| Growth rate (g) | 20.79% | ||||
| Earnings per share (EPS) | $18.31 | ||||
| Next year expected EPS | $22.11 | ||||
| Operating profit per share | $24.50 | ||||
| Sales per share | $104.85 | ||||
| Book value per share (BVPS) | $35.91 | ||||
| Valuation Ratios (Price Multiples) | |||||
| Price to earnings (P/E) | 5.36 | 47.11 | 40.05 | ||
| Price to next year expected earnings | 4.43 | 42.38 | 36.07 | ||
| Price-earnings-growth (PEG) | 0.26 | 4.21 | 3.63 | ||
| Price to operating profit (P/OP) | 4.00 | 15.93 | 25.16 | ||
| Price to sales (P/S) | 0.94 | 4.01 | 5.44 | ||
| Price to book value (P/BV) | 2.73 | 5.49 | 6.62 | ||
Based on: 10-K (reporting date: 2021-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Steel Dynamics Inc., historical price multiples
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The valuation multiples for Steel Dynamics Inc. from 2017 to 2021 exhibit significant volatility, characterized by a general contraction in profitability-based ratios toward the end of the period. While several metrics peaked or fluctuated mid-period, the final year of the analysis shows a marked decline in price-to-earnings and price-to-operating profit multiples, suggesting a substantial increase in underlying earnings relative to the market price.
- Price to Earnings (P/E) and Price to Operating Profit (P/OP)
- Both ratios demonstrate a closely correlated trend. The P/E ratio declined from 13.80 in 2017 to 6.76 in 2018, experienced a peak of 16.86 in 2020, and subsequently fell to a period low of 4.20 in 2021. Similarly, the P/OP ratio moved from 10.51 in 2017 to a peak of 10.96 in 2020 before dropping to 3.14 in 2021. This sharp compression in 2021 indicates a significant expansion in both net income and operating profit relative to the share price.
- Price to Sales (P/S)
- The P/S ratio shows a general downward trend from its 2017 high of 1.18, reaching a minimum of 0.55 in 2019. A temporary increase to 0.97 occurred in 2020, followed by a correction to 0.73 in 2021. The overall movement suggests the company's revenue growth outpaced the growth in its market capitalization over the five-year span.
- Price to Book Value (P/BV)
- The P/BV ratio decreased steadily from 3.35 in 2017 to 1.41 in 2019. Following this trough, the ratio recovered to 2.14 in 2020 and remained constant at 2.14 through 2021. This stability in the final two years indicates a consistent relationship between the market's valuation of the company and its equity book value.
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Price to Earnings (P/E)
Steel Dynamics Inc., historical P/E calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 191,299,162 | 211,005,100 | 213,554,449 | 224,105,246 | 236,071,369 | |
| Selected Financial Data (US$) | ||||||
| Net income attributable to Steel Dynamics, Inc. (in thousands) | 3,214,066) | 550,822) | 671,103) | 1,258,379) | 812,741) | |
| Earnings per share (EPS)2 | 16.80 | 2.61 | 3.14 | 5.62 | 3.44 | |
| Share price1, 3 | 70.58 | 44.01 | 26.89 | 37.95 | 47.51 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 4.20 | 16.86 | 8.56 | 6.76 | 13.80 | |
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Freeport-McMoRan Inc. | 14.75 | — | — | — | — | |
| P/E Ratio, Industry | ||||||
| Materials | 28.21 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
EPS = Net income attributable to Steel Dynamics, Inc. ÷ No. shares of common stock outstanding
= 3,214,066,000 ÷ 191,299,162 = 16.80
3 Closing price as at the filing date of Steel Dynamics Inc. Annual Report.
4 2021 Calculation
P/E ratio = Share price ÷ EPS
= 70.58 ÷ 16.80 = 4.20
5 Click competitor name to see calculations.
The valuation metrics for Steel Dynamics Inc. between 2017 and 2021 exhibit significant volatility, characterized by a divergent relationship between share price and earnings per share (EPS), which resulted in fluctuating price-to-earnings (P/E) ratios.
- Share Price Trends
- A period of decline is observed from 2017 to 2019, with the share price dropping from 47.51 USD to a low of 26.89 USD. This downward trend reversed sharply in 2020 and 2021, culminating in a peak value of 70.58 USD by the end of 2021.
- Earnings Per Share (EPS) Performance
- Earnings exhibited instability throughout the period. After an initial increase in 2018 to 5.62 USD, EPS declined for two consecutive years, reaching a period low of 2.61 USD in 2020. However, a substantial surge occurred in 2021, with EPS rising to 16.80 USD, representing a more than six-fold increase from the previous year.
- Price-to-Earnings (P/E) Ratio Dynamics
- The P/E ratio demonstrated an inverse correlation with earnings growth in the final two years of the period. In 2020, the ratio peaked at 16.86 as the share price recovered while earnings remained suppressed. Conversely, in 2021, the ratio compressed to 4.20, the lowest level in the analyzed timeframe. This compression indicates that the growth in earnings significantly outpaced the growth in share price, leading to a lower valuation multiple despite the record high share price.
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Price to Operating Profit (P/OP)
Steel Dynamics Inc., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 191,299,162 | 211,005,100 | 213,554,449 | 224,105,246 | 236,071,369 | |
| Selected Financial Data (US$) | ||||||
| Operating income (in thousands) | 4,301,105) | 847,142) | 986,880) | 1,722,409) | 1,066,881) | |
| Operating profit per share2 | 22.48 | 4.01 | 4.62 | 7.69 | 4.52 | |
| Share price1, 3 | 70.58 | 44.01 | 26.89 | 37.95 | 47.51 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 3.14 | 10.96 | 5.82 | 4.94 | 10.51 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Freeport-McMoRan Inc. | 7.59 | — | — | — | — | |
| P/OP Ratio, Industry | ||||||
| Materials | 17.73 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 4,301,105,000 ÷ 191,299,162 = 22.48
3 Closing price as at the filing date of Steel Dynamics Inc. Annual Report.
4 2021 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 70.58 ÷ 22.48 = 3.14
5 Click competitor name to see calculations.
The Price to Operating Profit (P/OP) ratio exhibits significant volatility between 2017 and 2021, characterized by a fluctuating relationship between market valuation and operational earnings. The period is marked by a notable divergence in 2021, where a surge in operational profitability led to a compression of the valuation multiple despite an increase in the share price.
- Share Price Trajectory
- The share price followed a U-shaped trend, declining from 47.51 US$ in 2017 to a period low of 26.89 US$ in 2019. A strong recovery followed, with the price ascending to 44.01 US$ in 2020 and reaching a peak of 70.58 US$ by the end of 2021.
- Operating Profit per Share Performance
- Operating profit per share demonstrated instability from 2017 through 2020, with a peak of 7.69 US$ in 2018 followed by a decline to 4.01 US$ in 2020. This was followed by an exponential increase in 2021, where operating profit per share rose to 22.48 US$, indicating a substantial increase in profitability.
- P/OP Ratio Analysis
- The P/OP ratio shifted from 10.51 in 2017 to a low of 4.94 in 2018, before rising to a five-year peak of 10.96 in 2020. The 2020 peak occurred as the share price recovered while operating profits hit a cyclical low. In 2021, the ratio dropped sharply to 3.14; this suggests that while the market valued the company more highly in absolute terms, the growth in operating profit vastly outpaced the increase in share price, resulting in a lower valuation multiple relative to earnings.
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Price to Sales (P/S)
Steel Dynamics Inc., historical P/S calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 191,299,162 | 211,005,100 | 213,554,449 | 224,105,246 | 236,071,369 | |
| Selected Financial Data (US$) | ||||||
| Net sales (in thousands) | 18,408,850) | 9,601,482) | 10,464,991) | 11,821,839) | 9,538,797) | |
| Sales per share2 | 96.23 | 45.50 | 49.00 | 52.75 | 40.41 | |
| Share price1, 3 | 70.58 | 44.01 | 26.89 | 37.95 | 47.51 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 0.73 | 0.97 | 0.55 | 0.72 | 1.18 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Freeport-McMoRan Inc. | 2.78 | — | — | — | — | |
| P/S Ratio, Industry | ||||||
| Materials | 3.83 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Sales per share = Net sales ÷ No. shares of common stock outstanding
= 18,408,850,000 ÷ 191,299,162 = 96.23
3 Closing price as at the filing date of Steel Dynamics Inc. Annual Report.
4 2021 Calculation
P/S ratio = Share price ÷ Sales per share
= 70.58 ÷ 96.23 = 0.73
5 Click competitor name to see calculations.
The valuation metrics from 2017 to 2021 demonstrate a non-linear relationship between market pricing and revenue generation, characterized by significant volatility in the Price-to-Sales (P/S) ratio.
- Price-to-Sales (P/S) Ratio Trends
- A notable contraction is observed between 2017 and 2019, during which the P/S ratio declined from 1.18 to 0.55. This downward trend reflects a period where the share price decreased more rapidly than the fluctuations in sales per share. A partial recovery occurred in 2020, with the ratio rising to 0.97, driven by a rebound in share price despite a marginal decrease in sales per share.
- Revenue Performance and Market Valuation
- The most significant shift occurred in 2021, marked by a substantial increase in sales per share to 96.23 US$. Although the share price reached a period high of 70.58 US$, the exponential growth in revenue led to a compression of the P/S ratio to 0.73. This indicates that the increase in top-line performance outpaced the expansion of the market's valuation multiple during this timeframe.
- Correlation Analysis
- The data indicates that the P/S ratio does not move in lockstep with the share price. While the share price climbed from a low of 26.89 US$ in 2019 to 70.58 US$ in 2021, the P/S ratio ended lower in 2021 (0.73) than it was in 2017 (1.18). This divergence is primarily attributable to the aggressive growth in sales per share observed in the final year of the analyzed period.
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Price to Book Value (P/BV)
Steel Dynamics Inc., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 191,299,162 | 211,005,100 | 213,554,449 | 224,105,246 | 236,071,369 | |
| Selected Financial Data (US$) | ||||||
| Total Steel Dynamics, Inc. equity (in thousands) | 6,304,641) | 4,345,164) | 4,075,834) | 3,935,071) | 3,351,574) | |
| Book value per share (BVPS)2 | 32.96 | 20.59 | 19.09 | 17.56 | 14.20 | |
| Share price1, 3 | 70.58 | 44.01 | 26.89 | 37.95 | 47.51 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 2.14 | 2.14 | 1.41 | 2.16 | 3.35 | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Freeport-McMoRan Inc. | 4.54 | — | — | — | — | |
| P/BV Ratio, Industry | ||||||
| Materials | 4.66 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
BVPS = Total Steel Dynamics, Inc. equity ÷ No. shares of common stock outstanding
= 6,304,641,000 ÷ 191,299,162 = 32.96
3 Closing price as at the filing date of Steel Dynamics Inc. Annual Report.
4 2021 Calculation
P/BV ratio = Share price ÷ BVPS
= 70.58 ÷ 32.96 = 2.14
5 Click competitor name to see calculations.
The financial data indicates a period of significant volatility in market valuation contrasted with a steady increase in the underlying book value of the company's equity between 2017 and 2021.
- Book Value Per Share (BVPS)
- A consistent upward trajectory is observed in the book value per share, which grew from US$14.20 in 2017 to US$32.96 by 2021. This represents a steady accumulation of net assets on a per-share basis throughout the five-year period, with a particularly sharp increase occurring between 2020 and 2021.
- Share Price Dynamics
- The share price experienced a notable decline during the first three years of the period, falling from US$47.51 in 2017 to a low of US$26.89 in 2019. This trend reversed sharply in 2020, with the price recovering to US$44.01, and continued upward to reach US$70.58 in 2021.
- Price to Book Value (P/BV) Ratio
- The P/BV ratio exhibited significant fluctuation, starting at 3.35 in 2017 and contracting to a minimum of 1.41 in 2019. This compression was the result of falling share prices occurring simultaneously with rising book values. The ratio subsequently rebounded to 2.14 in 2020 and remained constant at 2.14 in 2021. The stability of the ratio in the final year indicates that the substantial increase in share price was proportionally matched by the growth in the book value per share.
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