Mesabi Trust (NYSE:MSB – Get Free Report) and Steel Dynamics (NASDAQ:STLD – Get Free Report) are both materials companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.
Institutional & Insider Ownership
82.4% of Steel Dynamics shares are owned by institutional investors. 0.3% of Mesabi Trust shares are owned by company insiders. Comparatively, 6.6% of Steel Dynamics shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Risk & Volatility
Mesabi Trust has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500. Comparatively, Steel Dynamics has a beta of 1.48, meaning that its share price is 48% more volatile than the S&P 500.
Profitability
| Net Margins | Return on Equity | Return on Assets | |
| Mesabi Trust | 54.46% | 33.50% | 28.16% |
| Steel Dynamics | 7.83% | 18.12% | 9.81% |
Dividends
Mesabi Trust pays an annual dividend of $0.20 per share and has a dividend yield of 1.1%. Steel Dynamics pays an annual dividend of $2.12 per share and has a dividend yield of 0.9%. Mesabi Trust pays out 40.8% of its earnings in the form of a dividend. Steel Dynamics pays out 19.2% 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 Recommendations
This is a summary of current ratings for Mesabi Trust and Steel Dynamics, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Mesabi Trust | 0 | 1 | 0 | 0 | 2.00 |
| Steel Dynamics | 0 | 4 | 8 | 0 | 2.67 |
Steel Dynamics has a consensus target price of $257.45, indicating a potential upside of 7.66%. Given Steel Dynamics’ stronger consensus rating and higher possible upside, analysts plainly believe Steel Dynamics is more favorable than Mesabi Trust.
Valuation & Earnings
This table compares Mesabi Trust and Steel Dynamics”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Mesabi Trust | $17.52 million | 13.33 | $13.87 million | $0.49 | 36.33 |
| Steel Dynamics | $20.54 billion | 1.67 | $1.19 billion | $11.03 | 21.68 |
Steel Dynamics has higher revenue and earnings than Mesabi Trust. Steel Dynamics is trading at a lower price-to-earnings ratio than Mesabi Trust, indicating that it is currently the more affordable of the two stocks.
Summary
Steel Dynamics beats Mesabi Trust on 11 of the 17 factors compared between the two stocks.
About Mesabi Trust
Mesabi Trust, a royalty trust, engages in iron ore mining business in the United States. Mesabi Trust was founded in 1961 and is based in New York, New York.
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.
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