We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Reliance (RS) Up 24% in 6 Months: Will the Momentum Continue?
Read MoreHide Full Article
Reliance, Inc.’s (RS - Free Report) shares have popped 23.8% over the past six months. The company has also outperformed its industry’s decline of 3.2% over the same time frame. It has also topped the S&P 500’s roughly 15.9% rise over the same period.
Let’s dive into the factors behind this Zacks Rank #3 (Hold) stock’s price appreciation.
Image Source: Zacks Investment Research
Strong Demand, Acquisitions Drive Reliance
Reliance is gaining from strong underlying demand in its major markets. It anticipates continued healthy demand trends in the first quarter of 2024 despite ongoing macroeconomic uncertainties and geopolitical issues.
Demand in non-residential construction, the company’s biggest market, saw a notable improvement in 2023, with optimism for continued growth in the first quarter of 2024. Commercial aerospace demand remained strong, supported by defense appropriations. Toll processing services for the automotive sector witnessed growth, with expectations for further improvement. Overall manufacturing demand improved modestly, driven by organic growth investments.
Although the semiconductor market declined due to inventory issues, stability was observed in the fourth quarter. Reliance remains optimistic about long-term prospects, buoyed by the CHIPS Act and investments in capacity expansion in the United States.
The company has been following an aggressive acquisition strategy for a while as part of its core business policy to drive operating results. The acquisitions of Rotax Metals, Admiral Metals and Nu-Tech Precision Metals are in sync with its strategy of investing in high-quality businesses. The acquisition of Southern Steel Supply also expands the company’s reach in the Southern United States and boosts its value-added processing services.
The buyout of Cooksey Iron & Metal Co also boosts Reliance's presence in the fast-growing Southeastern market. Moreover, the acquisition of American Alloy will expand Reliance's product portfolio with specialty carbon steel plates as well as new production capabilities.
Reliance also remains committed to boost returns to shareholders. RS returned $479.5 million to shareholders through share repurchases in 2023. Notably, it has bought back around 7.5 million shares worth $1.43 billion in the past three years. RS also increased its quarterly dividend by 10% to $1.10 per share. It generated $525.6 million in cash flow from operations in the fourth quarter and $1.67 billion in 2023, owing to its strong profitability and good working capital management.
Will the Uptrend in Shares Last?
Reliance is expected to continue to gain from strong demand in key markets in the near term. The healthy demand in non-residential construction, strength in the commercial aerospace market and improving demand for toll processing services in the automotive market are expected to aid the company’s performance. Strong demand, stabilizing pricing for many of its products and organic and inorganic growth strategies adopted by the company are expected to support its performance in the first quarter of 2024.
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Denison Mines Corp. (DNN - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
The Zacks Consensus Estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 68% in the past year. CRS currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Denison Mines carries a Zacks Rank #1. DNN beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 300%. The company’s shares have soared roughly 79% in the past year.
The Zacks Consensus Estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 72% in the past year.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Reliance (RS) Up 24% in 6 Months: Will the Momentum Continue?
Reliance, Inc.’s (RS - Free Report) shares have popped 23.8% over the past six months. The company has also outperformed its industry’s decline of 3.2% over the same time frame. It has also topped the S&P 500’s roughly 15.9% rise over the same period.
Let’s dive into the factors behind this Zacks Rank #3 (Hold) stock’s price appreciation.
Image Source: Zacks Investment Research
Strong Demand, Acquisitions Drive Reliance
Reliance is gaining from strong underlying demand in its major markets. It anticipates continued healthy demand trends in the first quarter of 2024 despite ongoing macroeconomic uncertainties and geopolitical issues.
Demand in non-residential construction, the company’s biggest market, saw a notable improvement in 2023, with optimism for continued growth in the first quarter of 2024. Commercial aerospace demand remained strong, supported by defense appropriations. Toll processing services for the automotive sector witnessed growth, with expectations for further improvement. Overall manufacturing demand improved modestly, driven by organic growth investments.
Although the semiconductor market declined due to inventory issues, stability was observed in the fourth quarter. Reliance remains optimistic about long-term prospects, buoyed by the CHIPS Act and investments in capacity expansion in the United States.
The company has been following an aggressive acquisition strategy for a while as part of its core business policy to drive operating results. The acquisitions of Rotax Metals, Admiral Metals and Nu-Tech Precision Metals are in sync with its strategy of investing in high-quality businesses. The acquisition of Southern Steel Supply also expands the company’s reach in the Southern United States and boosts its value-added processing services.
The buyout of Cooksey Iron & Metal Co also boosts Reliance's presence in the fast-growing Southeastern market. Moreover, the acquisition of American Alloy will expand Reliance's product portfolio with specialty carbon steel plates as well as new production capabilities.
Reliance also remains committed to boost returns to shareholders. RS returned $479.5 million to shareholders through share repurchases in 2023. Notably, it has bought back around 7.5 million shares worth $1.43 billion in the past three years. RS also increased its quarterly dividend by 10% to $1.10 per share. It generated $525.6 million in cash flow from operations in the fourth quarter and $1.67 billion in 2023, owing to its strong profitability and good working capital management.
Will the Uptrend in Shares Last?
Reliance is expected to continue to gain from strong demand in key markets in the near term. The healthy demand in non-residential construction, strength in the commercial aerospace market and improving demand for toll processing services in the automotive market are expected to aid the company’s performance. Strong demand, stabilizing pricing for many of its products and organic and inorganic growth strategies adopted by the company are expected to support its performance in the first quarter of 2024.
Reliance, Inc. Price and Consensus
Reliance, Inc. price-consensus-chart | Reliance, Inc. Quote
Stocks to Consider
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Denison Mines Corp. (DNN - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
The Zacks Consensus Estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 68% in the past year. CRS currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Denison Mines carries a Zacks Rank #1. DNN beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 300%. The company’s shares have soared roughly 79% in the past year.
The Zacks Consensus Estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 72% in the past year.