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4 Reasons That Make Schnitzer Steel an Attractive Pick Now

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Schnitzer Steel’s (SCHN - Free Report) stock looks promising at the moment. The company, currently sporting a Zacks Rank #1 (Strong Buy), has seen its shares pop roughly 25% over the past three months. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let’s delve deeper into the factors that make this steel maker an attractive investment option.

What Makes SCHN an Attractive Pick?

An Outperformer: Schnitzer Steel has outperformed the industry it belongs to over a year. The company’s shares have moved up around 33.3% over this period, compared with roughly 25.7% gain recorded by the industry.  



 

Estimates Moving Up: Annual estimates for Schnitzer Steel have moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for fiscal 2017 has increased by around 24.2% to $1.49 per share. The Zacks Consensus Estimate for fiscal 2018 has also moved up 26.2% over the same timeframe to $1.83.

Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for Schnitzer Steel for fiscal 2017 is currently pegged at $1.49, reflecting an expected year-over-year growth of 115.9%. Moreover, earnings are expected to register a 22.5% growth in fiscal 2018.      

Growth Drivers in Place: Schnitzer Steel remains focused on growing its ferrous volumes, expanding margins, investing in technologies and systems to enhance product offerings and improving operational efficiency, which should lend supports to its results.

The company also continues to strengthen its balance sheet by generating robust operating cash flows that has enabled it to reduce debt, invest in operations and return capital to shareholders.

The company also remains on track with its cost savings and productivity initiatives. Schnitzer Steel, during the fiscal third quarter, substantially completed the execution of its targeted $30 million of annual cost savings and productivity actions announced in April last year, bringing the total benefits of its multi-year program to $160 million.
 
Schnitzer Steel has also integrated the operations of Auto and Metals Recycling (AMR) unit's Oregon metals recycling with the Steel Manufacturing Business (SMB) segment, forming a new division, Cascade Steel and Scrap (CSS). The move is aimed at enhancing its flexibility, generating internal synergies, improving customer service and to more effectively respond to changes across recycling and steel production market. The company expects to report the results of CSS operations as a single reportable segment starting in the fourth quarter of fiscal 2017.

Other Stocks to Consider

Other well-placed companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , The Chemours Company (CC - Free Report) and BASF SE (BASFY - Free Report) , all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kronos has an expected long-term earnings growth of 5%.

Chemours has an expected long-term earnings growth of 15.5%.

BASF has an expected long-term earnings growth of 8.6%.

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