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Schnitzer Steel Up 37% in 3 Months: What's Driving the Stock?

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Shares of Schnitzer Steel (SCHN - Free Report) have been performing well of late. The steel maker has seen its shares pop roughly 37% over the past three months. The company has also outperformed its industry’s gain of around 20% over the same time frame.  

Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock of late.



 

Driving Factors

Schnitzer Steel posted strong fiscal third-quarter results in June 2017 with both revenues and profits rising by double digits year over year. Its profits jumped around 55% year over year to $17 million or 60 cents per share in the quarter. Sales also climbed roughly 36% year over year to $477 million on the back of higher sales volumes and selling prices.

The results in the quarter was driven by the company's continued focus on profitable growth and productivity initiatives.

Schnitzer Steel remains focused on growing its ferrous volumes, expanding margins, investing in technologies and systems to enhance product offerings and improving operational efficiency.

Schnitzer Steel also remains on track with its cost savings and productivity initiatives. The company, during the fiscal third quarter, substantially completed the execution of its targeted $30 million of annual cost savings and productivity actions announced in April 2016, bringing the total benefits of its multi-year program to $160 million.

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.

Moreover, Schnitzer Steel has 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 stocks in the basic materials space worth considering include The Chemours Company (CC - Free Report) , Kronos Worldwide Inc (KRO - Free Report) and Kraton Corporation (KRA - Free Report) . All three sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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

Kraton has expected earnings growth of 7.2% for the current year.

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