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Zacks Investment Research downgraded Olympic Steel Inc. (ZEUS - Snapshot Report) to a Zacks Rank #5 (Strong Sell) on February 26, 2013.

Why the Downgrade?

Olympic Steel reported lackluster financial results for the fourth quarter and year 2012 on February 21, 2013. The company posted a net loss of 32 cents compared with the Zacks Consensus Estimate of earnings of 7 cents.

Revenue in the quarter came in at $291.7 million, down 8.8% year over year as the company suffered largely from lower steel demand and decline in prices. Olympic Steel's Flat products segment reported a revenue decline of 10.9% while revenue from Tubular and pipe products segment increased marginally.   

Operating results, excluding a goodwill impairment charge, swung into a loss and came in at $1.6 million compared with an operating income of $3.9 million reported in the year-ago quarter.    

The financial results for the quarter induced downward revisions in earnings estimates for the company. The Zacks Consensus Estimate for 2013 went down by 8.4% to $1.53 while that for 2014 decreased by 5.5% to $2.23 per share in the last 30 days. Also, negative earnings surprise in three out of four trailing quarters, with an average of -210.8%, raises our concern over the financial health of Olympic Steel.

Other Stocks to Consider

Other stocks to watch out for in the industry are Shiloh Industries Inc. (SHLO), with a Zacks Rank #1 (Strong Buy) while Companhia Siderurgica Nacional (SID - Analyst Report) and Nippon Steel & Sumitomo Metal Corporation (NSSMY) have a Zacks Rank #2 (Buy).

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