On the four Ms, Steel Dynamics earns 76 for management and 49 for moat. The management score rests on a return on invested capital of 8.2% and a gross margin of 13.0% — figures that describe a business earning a respectable return on what it employs. Debt sits at 0.47x equity. A moderate moat alongside strong management is a combination worth understanding before the price matters at all.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 13.6% a year, below the 14.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 21.1x. That produces an intrinsic value of $206.45, a 10-CAP price of $78.97 and a payback time price of $117.07, with the value zone set at the highest of the three, $117.07. Today's price of $226.17 is 93% above it.
The price is above the value zone and the business scores 49 for moat and 76 for management. Neither test argues for paying up here.
| Price | $226.17 |
| Market cap | $32.4B |
| P/E ratio | 20.5x |
| Return on invested capital | 8.2% |
| Gross margin | 13.0% |
| Debt to equity | 0.47x |
| Free cash flow yield | 2.0% |
| Growth rate used | 13.6% |
| Growth rate measured | 14.0% |
| Exit multiple assumed | 21.1x |
| Company | Moat | Buy price |
| Vulcan Materials Company (VMC) | 88 | $122.93 |
| Martin Marietta Materials (MLM) | 82 | $184.05 |
| PPG Industries (PPG) | 58 | $72.98 |
| International Flavors & Fragrances (IFF) | 25 | $44.44 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Steel Dynamics rather than accepting ours.