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Why Is Reliance Steel (RS) Down 9.6% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Reliance Steel & Aluminum Co. (RS - Free Report) . Shares have lost about 9.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Reliance Steel Tops Q1 Earnings & Sales Estimates
Reliance Steel posted a profit of $111.7 million or $1.52 per share in first-quarter 2017, up around 21% from $92.2 million or $1.27 per share a year ago. Earnings per share topped the Zacks Consensus Estimate of $1.42.
Reliance Steel recorded net sales of $2,419.3 million, up around 12% year over year, coming ahead of the Zacks Consensus Estimate of $2,348 million. The company saw strength across automotive and aerospace markets along with improved demand and higher metals pricing in the quarter.
Overall sales volume rose 2.5% year over year in the quarter while average prices per ton went up 9.7% year over year.
Financials
Reliance Steel ended the quarter with cash and cash equivalents of $133.8 million, up roughly 11% year over year. Long-term debt increased roughly 19% year over year to $1,951.9 million. Cash flow used in operations was $20.7 million. Net debt-to-capital ratio was 30.8% as of Mar 31, 2017, down from 33.4% as of Mar 31, 2016.
Reliance Steel did not repurchase any shares during the quarter. It had 8.4 million shares available for buyback under its existing share repurchase program at the end of the quarter.
Outlook
Moving ahead, Reliance Steel is seeing improved pricing and demand levels than what it saw a year ago. It will remain focused on boosting gross profit margin and maximizing market opportunities to drive earnings while managing operating expenses and inventory levels.
The company expects tons sold will be flat to up 2% in second-quarter 2017 compared with the first quarter. Average selling price for the quarter is expected to be flat to up 2% from the first quarter. The company expects earnings for the second quarter in the band of $1.50 to $1.60 per share.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Reliance Steel's stock has a nice Growth Score of 'B'. However, it is lagging on the momentum front with a score of 'D'. The stock was allocated a grade of 'A' on the value side, putting it in the top 20% 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.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Why Is Reliance Steel (RS) Down 9.6% Since the Last Earnings Report?
A month has gone by since the last earnings report for Reliance Steel & Aluminum Co. (RS - Free Report) . Shares have lost about 9.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Reliance Steel Tops Q1 Earnings & Sales Estimates
Reliance Steel posted a profit of $111.7 million or $1.52 per share in first-quarter 2017, up around 21% from $92.2 million or $1.27 per share a year ago. Earnings per share topped the Zacks Consensus Estimate of $1.42.
Reliance Steel recorded net sales of $2,419.3 million, up around 12% year over year, coming ahead of the Zacks Consensus Estimate of $2,348 million. The company saw strength across automotive and aerospace markets along with improved demand and higher metals pricing in the quarter.
Overall sales volume rose 2.5% year over year in the quarter while average prices per ton went up 9.7% year over year.
Financials
Reliance Steel ended the quarter with cash and cash equivalents of $133.8 million, up roughly 11% year over year. Long-term debt increased roughly 19% year over year to $1,951.9 million. Cash flow used in operations was $20.7 million. Net debt-to-capital ratio was 30.8% as of Mar 31, 2017, down from 33.4% as of Mar 31, 2016.
Reliance Steel did not repurchase any shares during the quarter. It had 8.4 million shares available for buyback under its existing share repurchase program at the end of the quarter.
Outlook
Moving ahead, Reliance Steel is seeing improved pricing and demand levels than what it saw a year ago. It will remain focused on boosting gross profit margin and maximizing market opportunities to drive earnings while managing operating expenses and inventory levels.
The company expects tons sold will be flat to up 2% in second-quarter 2017 compared with the first quarter. Average selling price for the quarter is expected to be flat to up 2% from the first quarter. The company expects earnings for the second quarter in the band of $1.50 to $1.60 per share.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Reliance Steel & Aluminum Co. Price and Consensus
Reliance Steel & Aluminum Co. Price and Consensus | Reliance Steel & Aluminum Co. Quote
VGM Scores
At this time, Reliance Steel's stock has a nice Growth Score of 'B'. However, it is lagging on the momentum front with a score of 'D'. The stock was allocated a grade of 'A' on the value side, putting it in the top 20% 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.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.