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Olympic Steel (ZEUS) Stock Up on Q3 Earnings & Revenue Beat

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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.

 

Olympic Steel, Inc. Price, Consensus and EPS Surprise

 

Olympic Steel, Inc. Price, Consensus and EPS Surprise

Olympic Steel, Inc. price-consensus-eps-surprise-chart | Olympic Steel, Inc. Quote

 

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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