Back to top

Analyst Blog

Reliance Steel & Aluminum Co.(RS - Analyst Report) reported net income of $67.9 million or 91 cents per share in the fourth quarter of 2011 compared with $39.5 million or 53 cents per share in the prior-year quarter. Results exceeded the Zacks Consensus Estimate of 78 cents per share. For full-year 2011, Reliance Steel posted net income of $343.8 million or $4.58 per share compared with $194.4 million or $2.61 per share in 2010.


Quarterly sales were $2.03 billion, up 28% from $1.58 billion in the prior-year quarter. The number of metal tons sold started off slow in the quarter and gradually picked up leading to a solid demand environment.

For full-year 2011, sales increased 29% to $8.13 billion. In the year, the company experienced slow but steady improvement in demand. Energy, agriculture and mining, aerospace, semiconductor and electronics, and toll processing businesses, experienced significant improvements over 2010. The non-residential construction showed marginal improvement, but significantly lagged compared to other markets.

Financial Position

Cash and cash equivalents were $84.6 million as of December 31, 2011 compared with $72.9 as of December 31, 2010. Net debt-to-total capital ratio was 28.4% as of December 31, 2011 compared with 23.5% as of December 31, 2010. The company has excess capital to expand its existing operations as well as acquisition opportunities. Reliance Steel had $645 million outstanding on its $1.5 billion credit facility as of December 31, 2011.


On February 14, 2012, the company’s board of directors declared a regular quarterly cash dividend of 15 cents per share of common stock, representing an increase of 25% in the company’s regular dividend rate. The dividend is payable on March 23, 2012 to shareholders of record as of March 2, 2012.


Continental Alloys & Services, Inc., acquired in August 2011, contributed $205 million sales for the five months ended December 31, 2011.  Further, Reliance Steel acquired McKey Perforating Co., Inc., and its subsidiary McKey Perforated Products Co. Inc., whose net sales were approximately $18 million, in February 2012.


The prices of most of the metals that the company sells increased during the fourth quarter and the company expects overall pricing to remain relatively strong throughout the first quarter of 2012. Further, Reliance Steel expects prices to remain volatile through 2012 with scrap, other raw material input costs and imports playing a major role in pricing trends.

The company believes that demand will continue to improve slowly, but steadily except for the energy aerospace, heavy equipment and auto industries, where it anticipates higher than average growth. Based on these expectations, earnings per share in 2012 are expected to be higher than 2011. Further, the company estimates earnings per share in the range of $1.15 to $1.25 for the first quarter of 2012.

Reliance Steel has tremendous earnings capacity with its broad and diversified product base, along with wide geographic footprint that position it well in the industry. The company continues to evaluate and execute additional growth projects, given the economic conditions and outlook.

Reliance Steel retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) “Hold” rating. We have recommended the shares of the company as “Outperform” for the long term (more than 6 months). Reliance Steel faces stiff competition from Metals USA Holdings Corp. (MUSA - Snapshot Report) and Worthington Industries Inc. (WOR - Snapshot Report).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%