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Reliance Steel (RS) Q4 Earnings and Revenues Surpass Estimates
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Reliance Steel & Aluminum Co. (RS - Free Report) posted profits of $129.6 million or $2.01 per share in the fourth quarter of 2020, down around 22% from $165.6 million or $2.44 per share in the year-ago quarter. Earnings per share beat the Zacks Consensus Estimate of $2.00.
The company recorded net sales of $2,134.1 million, down around 13% year over year. The figure, however, surpassed the Zacks Consensus Estimate of $2,103.3 million. The company saw improved demand in nearly all the end markets it serves in the quarter.
Reliance Steel & Aluminum Co. Price, Consensus and EPS Surprise
Shipments fell roughly 8% year over year and also declined 1% sequentially in the fourth quarter. The sequential decline is attributable to the seasonal slowdown associated with customer holiday-related shutdowns and fewer shipping days.
Demand in non-residential construction, the company’s biggest market, remained steady during the reported quarter on healthy bidding activity and strong product pricing. Moreover, the company witnessed strong demand for the toll processing services that it provides to the automotive market as automotive original equipment manufacturers and steel and aluminum mills continue to ramp up production following shutdowns in the second quarter. Reliance Steel also witnessed strength across semiconductor and aerospace defense markets along with a strong rebound in heavy industry in the fourth quarter. However, softness continued in commercial aerospace and energy.
Average prices per ton sold in the fourth quarter fell roughly 5% year over year to $1,683. Prices, however, rose around 5% on a sequential comparison basis.
FY20 Results
Earnings (as reported) for full-year 2020 were $5.66 per share, down from earnings of $10.34 per share a year ago. Revenues dropped roughly 20% year over year to $8,811.9 million for the full year.
Financials
Reliance Steel ended 2020 with cash and cash equivalents of $683.5 million, a nearly four-fold year-over-year increase. Long-term debt was $1,638.9 million, up around 8% year over year.
The company generated cash flow from operations of $1,173 million in 2020, down around 10% year over year.
Reliance Steel also repurchased shares worth $337.3 million and paid $164.1 million in dividends in 2020.
Outlook
Moving ahead, Reliance Steel expects overall demand to continue to improve in the first quarter of 2021. It remains optimistic about business conditions in the majority of its end markets.
Reliance Steel expects tons sold to be up 10-12% in the first quarter compared to the prior quarter. Moreover, it envisions the favorable metals pricing environment, mainly for carbon and stainless steel products, to continue in the first quarter on improving demand and the significant mill price hikes that took effect in the fourth quarter with some continuing into early 2021. Reliance Steel expects its average selling price per ton sold for the first quarter to be up 12-14% on a sequential comparison basis.
Factoring in these expectations, the company expects adjusted earnings per share in the band of $3.40-$3.50 for the first quarter.
Price Performance
Reliance Steel’s shares are up 8.3% over a year against the industry’s 21.1% decline.
Zacks Rank & Key Picks
Reliance Steel currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks worth considering in the basic materials space include Impala Platinum Holdings Limited (IMPUY - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and BHP Group (BHP - Free Report) .
Impala Platinum has an expected earnings growth rate of 195.9% for the current fiscal. The company’s shares have rallied around 42% in the past year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fortescue has a projected earnings growth rate of 78.4% for the current fiscal. The company’s shares have surged around 163% in a year. It currently has a Zacks Rank #2.
BHP Group has a projected earnings growth rate of 62.3% for the current fiscal year. The company’s shares have shot up around 47% in a year. It currently carries a Zacks Rank #2.
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Reliance Steel (RS) Q4 Earnings and Revenues Surpass Estimates
Reliance Steel & Aluminum Co. (RS - Free Report) posted profits of $129.6 million or $2.01 per share in the fourth quarter of 2020, down around 22% from $165.6 million or $2.44 per share in the year-ago quarter. Earnings per share beat the Zacks Consensus Estimate of $2.00.
The company recorded net sales of $2,134.1 million, down around 13% year over year. The figure, however, surpassed the Zacks Consensus Estimate of $2,103.3 million. The company saw improved demand in nearly all the end markets it serves in the quarter.
Reliance Steel & Aluminum Co. Price, Consensus and EPS Surprise
Reliance Steel & Aluminum Co. price-consensus-eps-surprise-chart | Reliance Steel & Aluminum Co. Quote
Volumes and Pricing
Shipments fell roughly 8% year over year and also declined 1% sequentially in the fourth quarter. The sequential decline is attributable to the seasonal slowdown associated with customer holiday-related shutdowns and fewer shipping days.
Demand in non-residential construction, the company’s biggest market, remained steady during the reported quarter on healthy bidding activity and strong product pricing. Moreover, the company witnessed strong demand for the toll processing services that it provides to the automotive market as automotive original equipment manufacturers and steel and aluminum mills continue to ramp up production following shutdowns in the second quarter. Reliance Steel also witnessed strength across semiconductor and aerospace defense markets along with a strong rebound in heavy industry in the fourth quarter. However, softness continued in commercial aerospace and energy.
Average prices per ton sold in the fourth quarter fell roughly 5% year over year to $1,683. Prices, however, rose around 5% on a sequential comparison basis.
FY20 Results
Earnings (as reported) for full-year 2020 were $5.66 per share, down from earnings of $10.34 per share a year ago. Revenues dropped roughly 20% year over year to $8,811.9 million for the full year.
Financials
Reliance Steel ended 2020 with cash and cash equivalents of $683.5 million, a nearly four-fold year-over-year increase. Long-term debt was $1,638.9 million, up around 8% year over year.
The company generated cash flow from operations of $1,173 million in 2020, down around 10% year over year.
Reliance Steel also repurchased shares worth $337.3 million and paid $164.1 million in dividends in 2020.
Outlook
Moving ahead, Reliance Steel expects overall demand to continue to improve in the first quarter of 2021. It remains optimistic about business conditions in the majority of its end markets.
Reliance Steel expects tons sold to be up 10-12% in the first quarter compared to the prior quarter. Moreover, it envisions the favorable metals pricing environment, mainly for carbon and stainless steel products, to continue in the first quarter on improving demand and the significant mill price hikes that took effect in the fourth quarter with some continuing into early 2021. Reliance Steel expects its average selling price per ton sold for the first quarter to be up 12-14% on a sequential comparison basis.
Factoring in these expectations, the company expects adjusted earnings per share in the band of $3.40-$3.50 for the first quarter.
Price Performance
Reliance Steel’s shares are up 8.3% over a year against the industry’s 21.1% decline.
Zacks Rank & Key Picks
Reliance Steel currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks worth considering in the basic materials space include Impala Platinum Holdings Limited (IMPUY - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and BHP Group (BHP - Free Report) .
Impala Platinum has an expected earnings growth rate of 195.9% for the current fiscal. The company’s shares have rallied around 42% in the past year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fortescue has a projected earnings growth rate of 78.4% for the current fiscal. The company’s shares have surged around 163% in a year. It currently has a Zacks Rank #2.
BHP Group has a projected earnings growth rate of 62.3% for the current fiscal year. The company’s shares have shot up around 47% in a year. It currently carries a Zacks Rank #2.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>