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Should Value Investors Pick Reliance Steel & Aluminum Stock?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Reliance Steel & Aluminum Co. (RS - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Reliance Steel & Aluminum has a trailing twelve months PE ratio of 18.01, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 22.48. If we focus on the long-term PE trend, Reliance Steel & Aluminum’s current PE level puts it above its midpoint of 15.03 over the past five years, with the number having risen rapidly over the past few months.
Nonetheless, the stock’s PE compares favorably with the Zacks Industrial Products sector’s trailing twelve months PE ratio, which stands at 25.55. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Reliance Steel & Aluminum has a forward PE ratio (price relative to this year’s earnings) of just 13.94, so it is fair to say that a slightly more value-oriented path may be ahead for Reliance Steel & Aluminum stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Reliance Steel & Aluminum has a P/S ratio of about 0.71. This is much lower than the S&P 500 average, which comes in at 3.56 right now. This makes the stock undervalued from the P/S aspect too.
Broad Value Outlook
In aggregate, Reliance Steel & Aluminum currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Reliance Steel & Aluminum a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio (another great indicator of value) for Reliance Steel & Aluminum is 12.00, a level that is lower than the industry average of 15.89. Clearly, RS is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Reliance Steel & Aluminum might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of C and a Momentum Score of A. This gives RS a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been quite encouraging. The current quarter has seen four estimates go higher in the past sixty days compared to no downward revisions, while the full year estimate has seen three upward and one downward revision in the same time period.
This has had a meaningful impact on the consensus estimate, as the current quarter consensus estimate has risen by 3.1% in the past two months, while the full year estimate has inched higher by 0.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
However, this bullish trend has likely not yet been reflected in the stock, as we have just a Zacks Rank #3 (Hold), which indicates expectations of in-line performance in the near term. Nonetheless, the bullish analyst sentiment indicates that the stock’s prospects in the near term look good.
Reliance Steel & Aluminum is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite a Zacks Rank #3, the stock enjoys an impressive Zacks Industry Rank (among top 2% of more than 250 industries) and a Zacks Rank #3, which hints at favorable broader factors. In fact, over the past year, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Should Value Investors Pick Reliance Steel & Aluminum Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
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One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Reliance Steel & Aluminum Co. (RS - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Reliance Steel & Aluminum has a trailing twelve months PE ratio of 18.01, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 22.48. If we focus on the long-term PE trend, Reliance Steel & Aluminum’s current PE level puts it above its midpoint of 15.03 over the past five years, with the number having risen rapidly over the past few months.
Nonetheless, the stock’s PE compares favorably with the Zacks Industrial Products sector’s trailing twelve months PE ratio, which stands at 25.55. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Reliance Steel & Aluminum has a forward PE ratio (price relative to this year’s earnings) of just 13.94, so it is fair to say that a slightly more value-oriented path may be ahead for Reliance Steel & Aluminum stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Reliance Steel & Aluminum has a P/S ratio of about 0.71. This is much lower than the S&P 500 average, which comes in at 3.56 right now. This makes the stock undervalued from the P/S aspect too.
Broad Value Outlook
In aggregate, Reliance Steel & Aluminum currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Reliance Steel & Aluminum a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio (another great indicator of value) for Reliance Steel & Aluminum is 12.00, a level that is lower than the industry average of 15.89. Clearly, RS is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Reliance Steel & Aluminum might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of C and a Momentum Score of A. This gives RS a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been quite encouraging. The current quarter has seen four estimates go higher in the past sixty days compared to no downward revisions, while the full year estimate has seen three upward and one downward revision in the same time period.
This has had a meaningful impact on the consensus estimate, as the current quarter consensus estimate has risen by 3.1% in the past two months, while the full year estimate has inched higher by 0.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
However, this bullish trend has likely not yet been reflected in the stock, as we have just a Zacks Rank #3 (Hold), which indicates expectations of in-line performance in the near term. Nonetheless, the bullish analyst sentiment indicates that the stock’s prospects in the near term look good.
Reliance Steel & Aluminum Co. Price and Consensus
Reliance Steel & Aluminum Co. Price and Consensus | Reliance Steel & Aluminum Co. Quote
Bottom Line
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Reliance Steel & Aluminum is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite a Zacks Rank #3, the stock enjoys an impressive Zacks Industry Rank (among top 2% of more than 250 industries) and a Zacks Rank #3, which hints at favorable broader factors. In fact, over the past year, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>