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Reliance Steel & Aluminum Co. (RS - Free Report) recently acquired Admiral Metals Servicecenter Company, Inc., which is a leading distributor of non-ferrous metal products in the North-Eastern United States. This is Reliance’s 70th acquisition since its Initial Public Offering (IPO) in 1994. The terms and conditions of the transaction have not yet been disclosed.
Admiral Metals, founded in 1950 and headquartered in Woburn, MA, caters to a wide variety of end markets, including the semiconductor, automotive, medical, infrastructure, aerospace and industrial markets through its eight strategically located service centers. It has a broad product offering covering around 3,000 SKUs that include aluminum, brass, bronze, copper, stainless steel and steel. It is worth noting that the company generated annual net sales of around $134 million in 2020.
Reliance stated that Admiral Metals’ strong reputation in the metal industry, its high levels of customer service and next-day delivery flexibility make it a good fit. Moreover, its portfolio is synchronous to RS’ strategy of investing in businesses that immediately result in accretive earnings. The buyout will enable Admiral Metals to leverage Reliance’s scale to capitalize on further growth opportunities while retaining its strong brand recognition.
RS’ shares have gained 29.3% over the past year compared with the industry’s 46.8% rise. The company’s estimated earnings growth rate for the current year is pegged at 166%.
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On its third-quarter earnings call, Reliance Steel remains optimistic about the business environment and expects robust or recovering demand in the majority of its end markets. However, factors such as bottlenecks in metal supply, labor shortages and supply-chain disruptions impacting shipments, as witnessed in the third quarter, are expected to persist in the fourth quarter as well. The company expects demand to be sequentially affected by normal seasonal factors, including customer holiday-related shutdowns and fewer shipping days in the fourth quarter.
Reliance Steel estimates its tons sold to be down 5-8% sequentially for the fourth quarter. Moreover, the metal prices at the beginning of the fourth quarter are higher than the average for the third quarter. Due to this upside, the company anticipates its average selling price per ton sold for the fourth quarter to go up in the range of 5-7%.
Considering the above-mentioned factors, the company expects adjusted earnings per share in a band of $5.05 to $5.15 for the fourth quarter.
Zacks Rank & Other Key Picks
Reliance Steel currently carries a Zacks Rank #2 (Buy).
Greif has an expected earnings growth rate of 11.4% for the current year. The Zacks Consensus Estimate for the current year has been revised 5.6% upward over the past 60 days.
Greif beat the Zacks Consensus Estimate for earnings in all the four trailing quarters, with the surprise being 16.76%, on average. GEF’s shares have also risen 26.2% over a year.
Donaldson has an expected earnings growth rate of 15.5% for the current year. The Zacks Consensus Estimate for the current year has been revised 2% upward over the past 60 days.
Donaldson beat the Zacks Consensus Estimate for earnings in all the four trailing quarters, with the surprise being 6.67%, on average. DCI’s shares have risen 4% over a year.
A.O. Smith has an expected earnings growth rate of 35.2% for the current year. The Zacks Consensus Estimate for the current year has been revised 7% upward over the past 60 days.
A.O. Smith beat the Zacks Consensus Estimate for earnings in all the four trailing quarters, with the surprise being 16.82%, on average. Shares of AOS have rallied around 51.9% over a year.
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Reliance Steel (RS) Buys Massachusetts-Based Admiral Metals
Reliance Steel & Aluminum Co. (RS - Free Report) recently acquired Admiral Metals Servicecenter Company, Inc., which is a leading distributor of non-ferrous metal products in the North-Eastern United States. This is Reliance’s 70th acquisition since its Initial Public Offering (IPO) in 1994. The terms and conditions of the transaction have not yet been disclosed.
Admiral Metals, founded in 1950 and headquartered in Woburn, MA, caters to a wide variety of end markets, including the semiconductor, automotive, medical, infrastructure, aerospace and industrial markets through its eight strategically located service centers. It has a broad product offering covering around 3,000 SKUs that include aluminum, brass, bronze, copper, stainless steel and steel. It is worth noting that the company generated annual net sales of around $134 million in 2020.
Reliance stated that Admiral Metals’ strong reputation in the metal industry, its high levels of customer service and next-day delivery flexibility make it a good fit. Moreover, its portfolio is synchronous to RS’ strategy of investing in businesses that immediately result in accretive earnings. The buyout will enable Admiral Metals to leverage Reliance’s scale to capitalize on further growth opportunities while retaining its strong brand recognition.
RS’ shares have gained 29.3% over the past year compared with the industry’s 46.8% rise. The company’s estimated earnings growth rate for the current year is pegged at 166%.
On its third-quarter earnings call, Reliance Steel remains optimistic about the business environment and expects robust or recovering demand in the majority of its end markets. However, factors such as bottlenecks in metal supply, labor shortages and supply-chain disruptions impacting shipments, as witnessed in the third quarter, are expected to persist in the fourth quarter as well. The company expects demand to be sequentially affected by normal seasonal factors, including customer holiday-related shutdowns and fewer shipping days in the fourth quarter.
Reliance Steel estimates its tons sold to be down 5-8% sequentially for the fourth quarter. Moreover, the metal prices at the beginning of the fourth quarter are higher than the average for the third quarter. Due to this upside, the company anticipates its average selling price per ton sold for the fourth quarter to go up in the range of 5-7%.
Considering the above-mentioned factors, the company expects adjusted earnings per share in a band of $5.05 to $5.15 for the fourth quarter.
Zacks Rank & Other Key Picks
Reliance Steel currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks from the industrial products space include Greif, Inc. (GEF - Free Report) , Donaldson Company, Inc. (DCI - Free Report) and A. O. Smith Corporation (AOS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Greif has an expected earnings growth rate of 11.4% for the current year. The Zacks Consensus Estimate for the current year has been revised 5.6% upward over the past 60 days.
Greif beat the Zacks Consensus Estimate for earnings in all the four trailing quarters, with the surprise being 16.76%, on average. GEF’s shares have also risen 26.2% over a year.
Donaldson has an expected earnings growth rate of 15.5% for the current year. The Zacks Consensus Estimate for the current year has been revised 2% upward over the past 60 days.
Donaldson beat the Zacks Consensus Estimate for earnings in all the four trailing quarters, with the surprise being 6.67%, on average. DCI’s shares have risen 4% over a year.
A.O. Smith has an expected earnings growth rate of 35.2% for the current year. The Zacks Consensus Estimate for the current year has been revised 7% upward over the past 60 days.
A.O. Smith beat the Zacks Consensus Estimate for earnings in all the four trailing quarters, with the surprise being 16.82%, on average. Shares of AOS have rallied around 51.9% over a year.