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Reliance Steel & Aluminum Company (RS)
NYSE:RS
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Reliance Steel
(NYSE:RS)74Outperform
Positive Factors
Financial Performance
Free cash flow remained strong.
Shareholder Returns
The quarterly dividend was raised 9%.
Negative Factors
Earnings
RS reported Q4 adjusted EPS of $2.22, below its $2.65-2.85 guide, and Bloomberg / VA consensus at $2.74 and BofAe at $2.72.
Reliance Steel (RS) vs. S&P 500 (SPY)
Market Cap
$15.74B
Dividend Yield1.52%
Average Volume (3M)425.40K
Price to Earnings (P/E)18.9
Beta (1Y)0.94
Revenue Growth-6.56%
EPS Growth-31.89%
CountryUS
Employees15,000
SectorBasic Materials
Sector Strength56
IndustrySteel
Share Statistics
EPS (TTM)15.44
Shares Outstanding52,972,080
10 Day Avg. Volume497,571
30 Day Avg. Volume425,403
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.12
Price to Cash Flow (P/CF)8.50
P/FCF Ratio11.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$326.00Price Target Upside15.92% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Reliance Steel Business Overview & Revenue Model
Company DescriptionReliance Steel & Aluminum Co. (RS) is a leading diversified metals service center company in North America. The company operates in the metals service industry, specializing in the distribution and value-added processing of a broad range of metal products, including carbon steel, stainless steel, aluminum, and alloy steel. Reliance Steel caters to a diverse set of industries such as aerospace, construction, energy, and manufacturing, providing customized metal solutions to meet various client specifications.
How the Company Makes MoneyReliance Steel makes money primarily through the distribution and processing of metal products. The company buys metal from primary metal producers and adds value through cutting, leveling, sawing, and other specialized processing services that meet specific customer requirements. This value-added processing allows Reliance Steel to sell its metal products at a premium compared to raw metal prices. Additionally, the company benefits from a broad and diverse customer base across multiple industries, minimizing reliance on any single market segment. Reliance Steel also engages in strategic acquisitions to expand its geographic footprint and enhance its product offerings, further contributing to its revenue streams.
Reliance Steel Financial Statement Overview
Summary
Reliance Steel demonstrates strong financial health with efficient operations, a robust balance sheet, and solid cash flow generation. The company maintains profitability and financial stability; however, recent declines in revenue, net income, ROE, and free cash flow highlight potential challenges. Management should focus on reversing these trends to sustain growth and shareholder value.Income Statement
Reliance Steel's income statement shows a strong gross profit margin over the years, indicating effective cost management and pricing strategies. However, there has been a decline in total revenue from 2022 to 2024, with revenue decreasing from $17.03 billion in 2022 to $13.84 billion in 2024. Despite this, the company maintains a healthy EBIT and EBITDA margin, demonstrating operational efficiency. The net profit margin has also been stable, although net income decreased. Overall, the company's profitability remains strong, but the declining revenue trend is a concern that needs monitoring.78
Positive
Balance Sheet
The balance sheet reflects a solid financial position with a high equity ratio, as stockholders' equity consistently accounts for a significant portion of total assets, reaching 72% in 2024. The debt-to-equity ratio is low, suggesting minimal reliance on debt financing. However, the return on equity has decreased from 25.9% in 2022 to 12.1% in 2024, indicating reduced profitability for shareholders. Overall, the company maintains financial stability, but the declining ROE trend requires attention.82
Very Positive
Cash Flow
Reliance Steel generates strong operating cash flow, which has been relatively stable over the years. The free cash flow has decreased from $1.77 billion in 2022 to $999 million in 2024, reflecting reduced cash available after capital expenditures. The operating cash flow to net income ratio remains strong, indicating efficient cash generation relative to reported earnings. However, the decrease in free cash flow suggests potential challenges in sustaining capital investments. Overall, the cash flow is solid, but the declining free cash flow trend should be addressed.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 13.84B | 14.81B | 17.02B | 14.09B | 8.81B | Gross Profit |
| 13.84B | 4.30B | 5.25B | 4.49B | 2.78B | EBIT |
| 1.16B | 1.74B | 2.51B | 1.95B | 565.80M | EBITDA |
| 1.45B | 2.03B | 2.76B | 2.20B | 928.70M | Net Income Common Stockholders |
| 875.20M | 1.34B | 1.84B | 1.41B | 369.10M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 318.10M | 1.08B | 1.17B | 300.50M | 683.50M | Total Assets |
| 10.02B | 10.48B | 10.33B | 9.54B | 8.11B | Total Debt |
| 1.42B | 1.38B | 1.87B | 1.87B | 1.85B | Net Debt |
| 1.10B | 297.10M | 691.90M | 1.57B | 1.17B | Total Liabilities |
| 2.79B | 2.75B | 3.23B | 3.44B | 2.98B | Stockholders Equity |
| 7.22B | 7.72B | 7.09B | 6.09B | 5.12B |
| Cash Flow | Free Cash Flow | |||
| 999.20M | 1.20B | 1.78B | 562.80M | 1.00B | Operating Cash Flow |
| 1.43B | 1.67B | 2.12B | 799.40M | 1.17B | Investing Cash Flow |
| -803.70M | -483.90M | -348.50M | -652.30M | -188.40M | Financing Cash Flow |
| -1.38B | -1.28B | -892.60M | -528.90M | -483.00M |
Reliance Steel Technical Analysis
Negative
281.23
Price Trends
283.63
Negative
292.90
Negative
289.29
Negative
Market Momentum
1.07
Positive
40.15
Neutral
15.94
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RS, the sentiment is Negative. The current price of 281.23 is below the 20-day moving average (MA) of 292.14, below the 50-day MA of 283.63, and below the 200-day MA of 289.29, indicating a bearish trend. The MACD of 1.07 indicates Positive momentum. The RSI at 40.15 is Neutral, neither overbought nor oversold. The STOCH value of 15.94 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RS.
Reliance Steel Risk Analysis
Reliance Steel disclosed 25 risk factors in its most recent earnings report. Reliance Steel reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Reliance Steel Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $20.56B | 13.72 | 17.20% | 1.41% | -6.68% | -32.96% | |
74 Outperform | $15.74B | 18.93 | 12.12% | 1.52% | -6.56% | -31.89% | |
73 Outperform | $7.99B | 22.01 | 19.88% | ― | 4.51% | -2.90% | |
73 Outperform | $29.86B | 15.31 | 9.99% | 1.62% | -11.46% | -53.29% | |
60 Neutral | $5.50B | 43.64 | 3.32% | 1.49% | -8.66% | -82.83% | |
57 Neutral | $8.49B | 24.12 | 3.38% | 0.51% | -13.48% | -56.94% | |
47 Neutral | $2.64B | -4.00 | -31.55% | 3.33% | 2.93% | -29.90% |
* Basic Materials Sector Average
Performance Comparison
RS
Reliance Steel
281.23
-36.42
-11.47%
ATI
ATI
56.22
6.57
13.23%
CMC
Commercial Metals Company
45.22
-6.73
-12.95%
NUE
Nucor
129.51
-52.46
-28.83%
STLD
Steel Dynamics
126.37
-1.71
-1.34%
X
United States Steel
37.70
-9.26
-19.72%
Reliance Steel Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: -4.22% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call highlighted the company's strong financial performance, effective acquisition strategy, and strategic capital deployment, which outweighed the challenges of declining average selling prices and sector-specific demand weaknesses. Reliance Steel & Aluminum Co. demonstrated resilience and growth in a competitive market.Highlights
Strong Financial Performance
Reliance Steel & Aluminum Co. achieved a full-year gross profit margin of 29.7% and non-GAAP earnings per share of $15.92, demonstrating strong execution in a challenging market.
Successful Acquisitions
The company acquired and integrated four companies in 2024, adding approximately $400 million of net sales annually and broadening its geographic footprint.
Significant Cash Flow
The company generated the third-highest annual cash flow from operations in its history at $1.43 billion.
Market Share Gains
Reliance outperformed the service center industry with a 4% increase in tons sold annually, compared to an industry-wide decrease of 2%.
Strategic Capital Deployment
The company invested $430 million in capital expenditures, $365 million in acquisitions, and $1.1 billion in share repurchases.
Lowlights
Decline in Average Selling Prices
The fourth-quarter average selling price per ton declined by 3.4% compared to the third quarter of 2024.
Challenging Semiconductor Market
Semiconductor industry shipments remained restrained in the fourth quarter due to excess inventories in the supply chain.
Heavy Equipment Demand Weakness
The heavy equipment sector, particularly in agriculture, experienced weaker demand through 2024.
Company Guidance
During the Reliance Steel & Aluminum Co. earnings call for the fourth quarter and full year of 2024, the company reported strong financial performance despite a challenging market environment. The company achieved a full-year gross profit margin of 29.7% and non-GAAP earnings per share of $15.92, driven by strategic growth initiatives and effective pricing management. Reliance successfully integrated four acquisitions in 2024, contributing approximately $400 million in annualized net sales. The company also reported the third-highest annual cash flow from operations in its history at $1.43 billion. Capital expenditures amounted to $430 million, with $365 million allocated to acquisitions, $1.1 billion to share repurchases, and $250 million returned to shareholders through dividends. Looking ahead to 2025, Reliance plans to maintain its gross profit margin within a sustainable range of 29% to 31%, with a capital expenditure budget of $325 million and total cash outlay expected to be between $375 million and $400 million, including carryover projects. The company anticipates a 6% to 8% increase in tons sold in the first quarter of 2025, with non-GAAP earnings per diluted share projected to be between $3.30 and $3.50.Reliance Steel Corporate Events
Executive/Board ChangesShareholder Meetings
Reliance Steel Announces Board Member Retirement Plan
Neutral
Dec 17, 2024
Reliance Steel announced that Mark V. Kaminski, a longstanding board member since 2004, will not stand for reelection at the 2025 Annual Meeting of Stockholders. Kaminski’s retirement is voluntary and not due to any disagreements with the company’s operations or policies, and he will continue to serve as a director until the meeting.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.