Olympic Steel, Inc.’s (ZEUS - Free Report) shares popped after the company reported better-than-expected third-quarter 2020 results. The top and the bottom line for the quarter surpassed the respective Zacks Consensus Estimate.
The Ohio-based company’s performance in the third quarter improved on a sequential comparison basis on the back of a steady rise in demand. Its shares shot up around 8.2% last Thursday on the forecast-topping results and have also rallied roughly 16.7% since then.
Earnings and Revenues Discussion
The company recorded to a loss of $1.5 million or 13 cents per share in the third quarter compared with a profit of $0.6 million or 5 cents a year ago.
Barring one-time items, adjusted loss came in at 14 cents per share for the reported quarter, narrower than the Zacks Consensus Estimate of a loss of 20 cents.
Net sales fell roughly 22% year over year to $299.9 million in the quarter. It, however, topped the Zacks Consensus Estimate of $259.5 million. The top line was affected by reduced average selling prices and volumes. However, the company saw a steady rise in volumes as the third quarter progressed with volumes approaching pre-pandemic levels in September. Flat-rolled volumes went up 23% on a sequential comparison basis in the reported quarter.
Margins
Adjusted EBITDA was $4.3 million for the reported quarter, down around 40% from the prior-year quarter.
Gross profit for the Carbon Flat Products segment for the reported quarter was $33.1 million, down around 16% year over year. Gross profit for the Specialty Metals Flat unit was $11.1 million, down roughly 20% from the year-ago quarter. For the Tubular and Pipe segment, gross profit was $15.7 million, down around 22% year over year.
Financials
The company ended the quarter with cash and cash equivalents of $5.1 million, down roughly 40% year over year.
For the first nine months of 2020, net operating cash flow was $28.6 million, down from $99.4 million for the same period a year ago.
Outlook
Moving ahead, the company is witnessing strengthening demand and tightening supply across the industry, which it expects to support a positive pricing environment as well as its results for a strong finish to 2020. The company also noted that it is well placed to deliver consistent profitability. It is also well positioned to invest in higher-return growth opportunities based on its strong balance sheet and access to capital.
Zacks Rank & Key Picks
Olympic Steel currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited (AEM - Free Report) , Barrick Gold Corporation (GOLD - Free Report) and B2Gold Corp. (BTG - Free Report) .
Agnico Eagle has a projected earnings growth rate of 103.1% for the current year. The company’s shares have gained around 27% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Barrick Gold has an expected earnings growth rate of 111.8% for the current year. The company’s shares have surged around 58% in the past year. It currently carries a Zacks Rank #2 (Buy).
B2Gold has a projected earnings growth rate of 257.1% for the current year. The company’s shares have shot up roughly 77% in a year. It currently carries a Zacks Rank #2.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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Olympic Steel, Inc.’s (ZEUS - Free Report) shares popped after the company reported better-than-expected third-quarter 2020 results. The top and the bottom line for the quarter surpassed the respective Zacks Consensus Estimate.
The Ohio-based company’s performance in the third quarter improved on a sequential comparison basis on the back of a steady rise in demand. Its shares shot up around 8.2% last Thursday on the forecast-topping results and have also rallied roughly 16.7% since then.
Earnings and Revenues Discussion
The company recorded to a loss of $1.5 million or 13 cents per share in the third quarter compared with a profit of $0.6 million or 5 cents a year ago.
Barring one-time items, adjusted loss came in at 14 cents per share for the reported quarter, narrower than the Zacks Consensus Estimate of a loss of 20 cents.
Net sales fell roughly 22% year over year to $299.9 million in the quarter. It, however, topped the Zacks Consensus Estimate of $259.5 million. The top line was affected by reduced average selling prices and volumes. However, the company saw a steady rise in volumes as the third quarter progressed with volumes approaching pre-pandemic levels in September. Flat-rolled volumes went up 23% on a sequential comparison basis in the reported quarter.
Margins
Adjusted EBITDA was $4.3 million for the reported quarter, down around 40% from the prior-year quarter.
Gross profit for the Carbon Flat Products segment for the reported quarter was $33.1 million, down around 16% year over year. Gross profit for the Specialty Metals Flat unit was $11.1 million, down roughly 20% from the year-ago quarter. For the Tubular and Pipe segment, gross profit was $15.7 million, down around 22% year over year.
Financials
The company ended the quarter with cash and cash equivalents of $5.1 million, down roughly 40% year over year.
For the first nine months of 2020, net operating cash flow was $28.6 million, down from $99.4 million for the same period a year ago.
Outlook
Moving ahead, the company is witnessing strengthening demand and tightening supply across the industry, which it expects to support a positive pricing environment as well as its results for a strong finish to 2020. The company also noted that it is well placed to deliver consistent profitability. It is also well positioned to invest in higher-return growth opportunities based on its strong balance sheet and access to capital.
Zacks Rank & Key Picks
Olympic Steel currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited (AEM - Free Report) , Barrick Gold Corporation (GOLD - Free Report) and B2Gold Corp. (BTG - Free Report) .
Agnico Eagle has a projected earnings growth rate of 103.1% for the current year. The company’s shares have gained around 27% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Barrick Gold has an expected earnings growth rate of 111.8% for the current year. The company’s shares have surged around 58% in the past year. It currently carries a Zacks Rank #2 (Buy).
B2Gold has a projected earnings growth rate of 257.1% for the current year. The company’s shares have shot up roughly 77% in a year. It currently carries a Zacks Rank #2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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