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Reliance Steel & Aluminum Co. (RS) Hit a 52 Week High, Can the Run Continue?
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Shares of Reliance Steel (RS - Free Report) have been strong performers lately, with the stock up 7.8% over the past month. The stock hit a new 52-week high of $217.28 in the previous session. Reliance Steel has gained 7.1% since the start of the year compared to the -6.2% move for the Zacks Industrial Products sector and the 0.8% return for the Zacks Metal Products - Distribution industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 27, 2022, Reliance Steel reported EPS of $6.48 versus consensus estimate of $6.2.
For the current fiscal year, Reliance Steel is expected to post earnings of $17.95 per share on $17.07 billion in revenues.
Valuation Metrics
While Reliance Steel has moved to its 52-week high in the recent past, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Reliance Steel has a Value Score of B. The stock's Growth and Momentum Scores are C and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 12.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 10.9X. On a trailing cash flow basis, the stock currently trades at 8.2X versus its peer group's average of 4.9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Reliance Steel currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Reliance Steel fits the bill. Thus, it seems as though Reliance Steel shares could have potential in the weeks and months to come.
How Does RS Stack Up to the Competition?
Shares of RS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Mitsui & Co. (MITSY - Free Report) . MITSY has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of B.
Earnings were strong last quarter. Mitsui & Co. beat our consensus estimate by 6.30%, and for the current fiscal year, MITSY is expected to post earnings of $94.58 per share on revenue of $83.63 billion.
Shares of Mitsui & Co. have gained 3.1% over the past month, and currently trade at a forward P/E of 6.29X and a P/CF of 4.52X.
The Metal Products - Distribution industry is in the top 5% of all the industries we have in our universe, so it looks like there are some nice tailwinds for RS and MITSY, even beyond their own solid fundamental situation.
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Reliance Steel & Aluminum Co. (RS) Hit a 52 Week High, Can the Run Continue?
Shares of Reliance Steel (RS - Free Report) have been strong performers lately, with the stock up 7.8% over the past month. The stock hit a new 52-week high of $217.28 in the previous session. Reliance Steel has gained 7.1% since the start of the year compared to the -6.2% move for the Zacks Industrial Products sector and the 0.8% return for the Zacks Metal Products - Distribution industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 27, 2022, Reliance Steel reported EPS of $6.48 versus consensus estimate of $6.2.
For the current fiscal year, Reliance Steel is expected to post earnings of $17.95 per share on $17.07 billion in revenues.
Valuation Metrics
While Reliance Steel has moved to its 52-week high in the recent past, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Reliance Steel has a Value Score of B. The stock's Growth and Momentum Scores are C and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 12.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 10.9X. On a trailing cash flow basis, the stock currently trades at 8.2X versus its peer group's average of 4.9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Reliance Steel currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Reliance Steel fits the bill. Thus, it seems as though Reliance Steel shares could have potential in the weeks and months to come.
How Does RS Stack Up to the Competition?
Shares of RS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Mitsui & Co. (MITSY - Free Report) . MITSY has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of B.
Earnings were strong last quarter. Mitsui & Co. beat our consensus estimate by 6.30%, and for the current fiscal year, MITSY is expected to post earnings of $94.58 per share on revenue of $83.63 billion.
Shares of Mitsui & Co. have gained 3.1% over the past month, and currently trade at a forward P/E of 6.29X and a P/CF of 4.52X.
The Metal Products - Distribution industry is in the top 5% of all the industries we have in our universe, so it looks like there are some nice tailwinds for RS and MITSY, even beyond their own solid fundamental situation.