The broad stock market has been in decline for about a year. Steel shares didn't turn sour until summer, when commodity prices began to tumble. A ton of hot-rolled sheet steel now fetches half its July price. Since mid-June, Nucor (NUE) and Steel Dynamics (STLD) have lost two-thirds and three-quarters of their stock value, respectively.

Managers for each company have decried their stock price as nonsensical of late. Relative to the broad market's decline, they have little to complain about. Five-year holders of big steel stocks have still about doubled their money. Those in S&P 500 index funds are down. On valuation, though, the bosses have a point. Steel Dynamics shares go for a mere three times the company's past four quarters' worth of earnings. That's less than a quarter of the broad market's price.

Of course, the miniscule price/earnings ratio suggests investors expect earnings to plunge. They surely will. Early Thursday, Charlotte-based Nucor reported a 93% jump in third-quarter earnings per share, beating analysts' expectations, but also called financial projections for its fourth quarter "impractical," citing a "world-wide financial crisis that is unique in both size and scope in our lifetime." Late Wednesday, Steel Dynamics reported a 92% rise in third-quarter earnings per share, falling short of expectations. It withdrew full-year guidance but took a shot on the fourth quarter: "about half" of third-quarter earnings.

A halving of earnings is never welcome news. But a halving of earnings that recently nearly doubled would prove less of a disaster than the current stock price suggests. Suppose earnings indeed fall from 98 cents to 49 between the third and fourth quarters. A year's worth of the new, lower earnings pace puts shares at just over four times earnings. Clearly, investors are bracing for worse. Perhaps they expect a world-wide slowdown in construction to leave steelmakers with a glut of inventory. Steel companies, though, have reduced production to try to prevent just such an outcome. And while lower steel prices won't help the top line, lower prices for raw materials used to make steel, like ferrous scrap, might help keep margins healthy.

Thursday afternoon, while the broad market was trading 2% higher, shares of Steel Dynamics were up more than 15%. Investors might be re-thinking the valuations. They might also be drawn in by Steel Dynamics' 4.5% dividend yield. The stock turned up recently on a search for companies that seem cheap relative to sales, profits and free cash flow, and that pay ample dividends. Have a look at all six companies the screen produced if you like, or run the search anytime using SmartMoney's stock screener and the full list of search criteria.

Three-Point Value Screen Recipe

• Trailing price/earnings ratio below industry median
• Price/sales ratio below industry median
• Price/free-cash-flow ratio below 20
• Dividend yield greater than 3%
• Trailing 12-month sales greater than $500 million
• Average daily trading volume greater than 100,000 shares