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Reliance Steel (RS) Down 2.8% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Reliance Steel (RS - Free Report) . Shares have lost about 2.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Reliance Steel due for a breakout? 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 catalysts.
Reliance Steel’s Earnings Lag, Sales Beat Estimates in Q4
Reliance Steel posted profit of $85.6 million or $1.22 per share in the fourth quarter of 2018, down roughly 72% from $301.4 million or $4.09 in the year-ago quarter. The bottom line in the reported quarter was hurt by a hefty LIFO inventory expense.
Barring one-time items, adjusted earnings were $1.08 per share for the reported quarter, which fell from $1.22 in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $1.71.
Reliance Steel recorded net sales of $2,814 million, up around 18% year over year. It beat the Zacks Consensus Estimate of $2,765.3 million. The company witnessed a healthy demand environment and stable metal pricing conditions during the quarter.
FY18 Results
For 2018, profits were $633.7 million or $8.75 per share, up around 3% from $613.4 million or $8.34 recorded in 2017.
Net sales for the year went up around 19% year over year to record $11,534.5 million on the back of favorable pricing and healthy demand.
Volumes and Pricing
Overall sales volume went down 1.6% year over year to around 1.43 million tons in the reported quarter. Average prices per ton sold for the quarter rose around 20% year over year to $1,965.
Financials
Reliance Steel ended 2018 with cash and cash equivalents of $128.2 million, down roughly 17% year over year. Long-term debt was $2,138.5 million, up 18% year over year. Cash flow from operations was $431.3 million for the fourth quarter and $664.6 million for 2018.
Outlook
Moving ahead, Reliance Steel is optimistic about business conditions for the first quarter of 2019. It expects demand to be healthy in the first quarter and projects tons sold to be up 6-8% sequentially in the quarter.
The company also expects price hikes for many of its products based on current demand levels, impact of ongoing trade actions and raw material costs. However, it expects average selling price per ton for the first quarter to be flat-to-down 1% compared with fourth-quarter tally. Per the company, the expected price hikes will not be effective for the full quarter and its average selling price trended downward during each month of fourth-quarter 2018.
Additionally, the company expects adjusted earnings per share in the band of $2.35 to $2.45 for the first quarter based on an expected LIFO income and benefits of lower number of total shares outstanding due to share buybacks in 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 17.65% due to these changes.
VGM Scores
At this time, Reliance Steel has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Reliance Steel has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Reliance Steel (RS) Down 2.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Reliance Steel (RS - Free Report) . Shares have lost about 2.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Reliance Steel due for a breakout? 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 catalysts.
Reliance Steel’s Earnings Lag, Sales Beat Estimates in Q4
Reliance Steel posted profit of $85.6 million or $1.22 per share in the fourth quarter of 2018, down roughly 72% from $301.4 million or $4.09 in the year-ago quarter. The bottom line in the reported quarter was hurt by a hefty LIFO inventory expense.
Barring one-time items, adjusted earnings were $1.08 per share for the reported quarter, which fell from $1.22 in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $1.71.
Reliance Steel recorded net sales of $2,814 million, up around 18% year over year. It beat the Zacks Consensus Estimate of $2,765.3 million. The company witnessed a healthy demand environment and stable metal pricing conditions during the quarter.
FY18 Results
For 2018, profits were $633.7 million or $8.75 per share, up around 3% from $613.4 million or $8.34 recorded in 2017.
Net sales for the year went up around 19% year over year to record $11,534.5 million on the back of favorable pricing and healthy demand.
Volumes and Pricing
Overall sales volume went down 1.6% year over year to around 1.43 million tons in the reported quarter. Average prices per ton sold for the quarter rose around 20% year over year to $1,965.
Financials
Reliance Steel ended 2018 with cash and cash equivalents of $128.2 million, down roughly 17% year over year. Long-term debt was $2,138.5 million, up 18% year over year. Cash flow from operations was $431.3 million for the fourth quarter and $664.6 million for 2018.
Outlook
Moving ahead, Reliance Steel is optimistic about business conditions for the first quarter of 2019. It expects demand to be healthy in the first quarter and projects tons sold to be up 6-8% sequentially in the quarter.
The company also expects price hikes for many of its products based on current demand levels, impact of ongoing trade actions and raw material costs. However, it expects average selling price per ton for the first quarter to be flat-to-down 1% compared with fourth-quarter tally. Per the company, the expected price hikes will not be effective for the full quarter and its average selling price trended downward during each month of fourth-quarter 2018.
Additionally, the company expects adjusted earnings per share in the band of $2.35 to $2.45 for the first quarter based on an expected LIFO income and benefits of lower number of total shares outstanding due to share buybacks in 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 17.65% due to these changes.
VGM Scores
At this time, Reliance Steel has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Reliance Steel has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.