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Why Is Reliance Steel (RS) Up 17.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Reliance Steel (RS - Free Report) . Shares have added about 17.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Reliance Steel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Reliance Steel’s Q4 Earnings and Revenues Surpass Estimates
Reliance Steel posted profits of $129.6 million or $2.01 per share in the fourth quarter of 2020, down around 22% from $165.6 million or $2.44 per share in the year-ago quarter. Earnings per share beat the Zacks Consensus Estimate of $2.00.
The company recorded net sales of $2,134.1 million, down around 13% year over year. The figure, however, surpassed the Zacks Consensus Estimate of $2,103.3 million. The company saw improved demand in nearly all the end markets it serves in the quarter.
Volumes and Pricing
Shipments fell roughly 8% year over year and also declined 1% sequentially in the fourth quarter. The sequential decline is attributable to the seasonal slowdown associated with customer holiday-related shutdowns and fewer shipping days.
Demand in non-residential construction, the company’s biggest market, remained steady during the reported quarter on healthy bidding activity and strong product pricing. Moreover, the company witnessed strong demand for the toll processing services that it provides to the automotive market. Reliance Steel also witnessed strength across semiconductor and aerospace defense markets along with a strong rebound in heavy industry in the fourth quarter. However, softness continued in commercial aerospace and energy.
Average prices per ton sold in the fourth quarter fell roughly 5% year over year to $1,683. Prices, however, rose around 5% on a sequential comparison basis.
FY20 Results
Earnings (as reported) for full-year 2020 were $5.66 per share, down from earnings of $10.34 per share a year ago. Revenues dropped roughly 20% year over year to $8,811.9 million for the full year.
Financials
Reliance Steel ended 2020 with cash and cash equivalents of $683.5 million, a nearly four-fold year-over-year increase. Long-term debt was $1,638.9 million, up around 8% year over year.
The company generated cash flow from operations of $1,173 million in 2020, down around 10% year over year.
Outlook
Moving ahead, Reliance Steel expects overall demand to continue to improve in the first quarter of 2021. It remains optimistic about business conditions in the majority of its end markets.
Reliance Steel expects tons sold to be up 10-12% in the first quarter compared to the prior quarter. Moreover, it envisions the favorable metals pricing environment, mainly for carbon and stainless steel products, to continue in the first quarter on improving demand and the significant mill price hikes that took effect in the fourth quarter with some continuing into early 2021. Reliance Steel expects its average selling price per ton sold for the first quarter to be up 12-14% on a sequential comparison basis.
Factoring in these expectations, the company expects adjusted earnings per share in the band of $3.40-$3.50 for the first quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 18.83% due to these changes.
VGM Scores
Currently, Reliance Steel has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Reliance Steel has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Reliance Steel (RS) Up 17.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Reliance Steel (RS - Free Report) . Shares have added about 17.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Reliance Steel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Reliance Steel’s Q4 Earnings and Revenues Surpass Estimates
Reliance Steel posted profits of $129.6 million or $2.01 per share in the fourth quarter of 2020, down around 22% from $165.6 million or $2.44 per share in the year-ago quarter. Earnings per share beat the Zacks Consensus Estimate of $2.00.
The company recorded net sales of $2,134.1 million, down around 13% year over year. The figure, however, surpassed the Zacks Consensus Estimate of $2,103.3 million. The company saw improved demand in nearly all the end markets it serves in the quarter.
Volumes and Pricing
Shipments fell roughly 8% year over year and also declined 1% sequentially in the fourth quarter. The sequential decline is attributable to the seasonal slowdown associated with customer holiday-related shutdowns and fewer shipping days.
Demand in non-residential construction, the company’s biggest market, remained steady during the reported quarter on healthy bidding activity and strong product pricing. Moreover, the company witnessed strong demand for the toll processing services that it provides to the automotive market. Reliance Steel also witnessed strength across semiconductor and aerospace defense markets along with a strong rebound in heavy industry in the fourth quarter. However, softness continued in commercial aerospace and energy.
Average prices per ton sold in the fourth quarter fell roughly 5% year over year to $1,683. Prices, however, rose around 5% on a sequential comparison basis.
FY20 Results
Earnings (as reported) for full-year 2020 were $5.66 per share, down from earnings of $10.34 per share a year ago. Revenues dropped roughly 20% year over year to $8,811.9 million for the full year.
Financials
Reliance Steel ended 2020 with cash and cash equivalents of $683.5 million, a nearly four-fold year-over-year increase. Long-term debt was $1,638.9 million, up around 8% year over year.
The company generated cash flow from operations of $1,173 million in 2020, down around 10% year over year.
Outlook
Moving ahead, Reliance Steel expects overall demand to continue to improve in the first quarter of 2021. It remains optimistic about business conditions in the majority of its end markets.
Reliance Steel expects tons sold to be up 10-12% in the first quarter compared to the prior quarter. Moreover, it envisions the favorable metals pricing environment, mainly for carbon and stainless steel products, to continue in the first quarter on improving demand and the significant mill price hikes that took effect in the fourth quarter with some continuing into early 2021. Reliance Steel expects its average selling price per ton sold for the first quarter to be up 12-14% on a sequential comparison basis.
Factoring in these expectations, the company expects adjusted earnings per share in the band of $3.40-$3.50 for the first quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 18.83% due to these changes.
VGM Scores
Currently, Reliance Steel has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Reliance Steel has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.