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What Makes Reliance Steel (RS) Stock a Solid Choice Right Now
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Reliance Steel & Aluminum Co. (RS - Free Report) is benefiting from strong demand across key end-use markets, a diversified product base and strategic acquisitions. Shares of the company have shot up 17% over the past six months.
We are positive about the company’s prospects and believe that the time is right to add the stock to one’s portfolio as it looks poised to carry the momentum ahead.
Reliance Steel currently carries a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities.
Let’s delve deeper into the factors that make this metals service center company an attractive choice for investors right now.
Price Performance
Shares of Reliance Steel have soared 58.6% over the past year compared with the 57.2% growth of the industry. It has also outperformed the S&P 500’s 36.6% rise over the same period.
Image Source: Zacks Investment Research
Estimates Going Up
Over the past three months, the Zacks Consensus Estimate for earnings for Reliance Steel for 2021 has increased roughly 47%. The favorable estimate revisions instill investor confidence in the stock.
Healthy Growth Prospects
The Zacks Consensus Estimate for 2021 earnings of Reliance Steel is currently pegged at $15.12 per share, indicating year-over-year growth of 96.1%. The company also has an expected long-term earnings per share growth rate of 9%.
Positive Earnings Surprise History
Reliance Steel’s earnings have outpaced the Zacks Consensus Estimate in the trailing four quarters. In this time frame, it has delivered an earnings surprise of 68.5%, on average.
Upbeat Prospects
Reliance Steel anticipates higher demand in major end-use markets. It saw higher shipments on a sequential basis in the first quarter of 2021, owing to improved demand in many of its end markets.
Demand in non-residential construction, the company’s biggest market, has gradually increased and is nearing pre-pandemic levels. Moreover, the company witnessed a significant rebound in demand for the toll processing services that it provides to the automotive market as automotive original equipment manufacturers, and steel and aluminum mills ramped up production. It remains optimistic about business conditions in the majority of its end markets and expects adjusted earnings per share in a band of $4.20-$4.40 for the second quarter.
Also, the company expects its average selling prices to rise sequentially in the second quarter of 2021. It is seeing strong pricing for carbon steel products. Higher prices will act as tailwinds and support its top line and margins.
Reliance Steel also continues with its aggressive acquisition strategy. The acquisition of All Metals Holding is in sync with its growth strategy and meets its requirements of buying high-quality businesses, which are immediately accretive to its earnings. All Metals bolsters Reliance Steel’s toll processing and logistics services businesses.
The acquisition of Fry Steel Company is also in sync with Reliance Steel’s business model and strategy of investing in high-quality and high-margin businesses. This move also supports the company’s customer base and product diversification strategy.
Image: Bigstock
What Makes Reliance Steel (RS) Stock a Solid Choice Right Now
Reliance Steel & Aluminum Co. (RS - Free Report) is benefiting from strong demand across key end-use markets, a diversified product base and strategic acquisitions. Shares of the company have shot up 17% over the past six months.
We are positive about the company’s prospects and believe that the time is right to add the stock to one’s portfolio as it looks poised to carry the momentum ahead.
Reliance Steel currently carries a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities.
Let’s delve deeper into the factors that make this metals service center company an attractive choice for investors right now.
Price Performance
Shares of Reliance Steel have soared 58.6% over the past year compared with the 57.2% growth of the industry. It has also outperformed the S&P 500’s 36.6% rise over the same period.
Image Source: Zacks Investment Research
Estimates Going Up
Over the past three months, the Zacks Consensus Estimate for earnings for Reliance Steel for 2021 has increased roughly 47%. The favorable estimate revisions instill investor confidence in the stock.
Healthy Growth Prospects
The Zacks Consensus Estimate for 2021 earnings of Reliance Steel is currently pegged at $15.12 per share, indicating year-over-year growth of 96.1%. The company also has an expected long-term earnings per share growth rate of 9%.
Positive Earnings Surprise History
Reliance Steel’s earnings have outpaced the Zacks Consensus Estimate in the trailing four quarters. In this time frame, it has delivered an earnings surprise of 68.5%, on average.
Upbeat Prospects
Reliance Steel anticipates higher demand in major end-use markets. It saw higher shipments on a sequential basis in the first quarter of 2021, owing to improved demand in many of its end markets.
Demand in non-residential construction, the company’s biggest market, has gradually increased and is nearing pre-pandemic levels. Moreover, the company witnessed a significant rebound in demand for the toll processing services that it provides to the automotive market as automotive original equipment manufacturers, and steel and aluminum mills ramped up production. It remains optimistic about business conditions in the majority of its end markets and expects adjusted earnings per share in a band of $4.20-$4.40 for the second quarter.
Also, the company expects its average selling prices to rise sequentially in the second quarter of 2021. It is seeing strong pricing for carbon steel products. Higher prices will act as tailwinds and support its top line and margins.
Reliance Steel also continues with its aggressive acquisition strategy. The acquisition of All Metals Holding is in sync with its growth strategy and meets its requirements of buying high-quality businesses, which are immediately accretive to its earnings. All Metals bolsters Reliance Steel’s toll processing and logistics services businesses.
The acquisition of Fry Steel Company is also in sync with Reliance Steel’s business model and strategy of investing in high-quality and high-margin businesses. This move also supports the company’s customer base and product diversification strategy.
Reliance Steel & Aluminum Co. Price and Consensus
Reliance Steel & Aluminum Co. price-consensus-chart | Reliance Steel & Aluminum Co. Quote
Other Stocks to Consider
Other stocks worth considering in the industrial products space include Alcoa Corp. (AA - Free Report) and Mitsui & Co., Ltd. (MITSY - Free Report) , both sporting a Zacks Rank #1, and Crown Holdings, Inc. (CCK - Free Report) , carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alcoa has an expected earnings growth rate of 517.2% for the current year. The company’s shares have skyrocketed 160.5% over the past year.
Mitsui has a projected earnings growth rate of 99.6% for the current year. The company’s shares have surged around 51.7% over a year.
Crown Holdings has a projected earnings growth rate of 15.9% for the current year. The company’s shares have gained 57% over a year.