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Should Value Investors Buy Reliance Steel (RS) Stock?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Reliance Steel (RS - Free Report) . RS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.58, which compares to its industry's average of 10.51. RS's Forward P/E has been as high as 16.92 and as low as 9.58, with a median of 14.71, all within the past year.

Another notable valuation metric for RS is its P/B ratio of 1.62. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.21. Within the past 52 weeks, RS's P/B has been as high as 2.11 and as low as 1.29, with a median of 1.68.

Finally, investors should note that RS has a P/CF ratio of 8.88. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.35. Over the past 52 weeks, RS's P/CF has been as high as 16.84 and as low as 8.88, with a median of 12.37.

Value investors will likely look at more than just these metrics, but the above data helps show that Reliance Steel is likely undervalued currently. And when considering the strength of its earnings outlook, RS sticks out at as one of the market's strongest value stocks.


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