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Reliance Steel (RS) Tops Q4 Earnings & Sales Estimates

Zacks

Reliance Steel RS posted a profit of $61.7 million or 84 cents per share in the fourth quarter of 2016, down around 10% from $68.6 million or 94 cents per share a year ago. Earnings per share, however, topped the Zacks Consensus Estimate of 75 cents.

Revenues rose around 1.7% year over year to $2.06 billion in the reported quarter, beating the Zacks Consensus Estimate of $2.03 billion. The company continued to witness strength across automotive and aerospace markets in the quarter.

Overall sales volume declined 1.1% year over year in the quarter while average prices per ton went up 2.7% year over year.

Reliance Steel & Aluminum Co. Price, Consensus and EPS Surprise

Reliance Steel & Aluminum Co. Price, Consensus and EPS Surprise | Reliance Steel & Aluminum Co. Quote


FY16 Results

The company recorded a profit of $304.3 million or $4.16 per share for 2016, down 2.3% year over year.

Sales for the full year were $8.61 billion, down 7.9% year over year.

Financials

Reliance Steel ended the quarter with cash and cash equivalents of $122.8 million, up roughly 18% year over year. Long-term debt increased roughly 29% year over year to $1,846.7 million. Cash flow from operations for 2016 was $626.5 million. Net debt-to-capital ratio was 30.3% as of Dec 31, 2016, down from 31.8% as of Dec 31, 2015.

Reliance Steel did not repurchase any shares during 2016. It had 8.4 million shares available for buyback under its existing share repurchase program at the end of the year.

The company’s board declared a 5.9% increase in the quarterly cash dividend to 45 cents per share, payable to stockholders on Mar 24, 2017.

Outlook

Moving ahead, Reliance Steel is optimistic about business activity levels and metal pricing. The company anticipates tons sold to be up 8% to 10% on a sequential comparison basis in the first quarter of 2017, partly due to normal seasonal factors.

Moreover, Reliance Steel expects its average selling price to be up 2% to 4% in the first quarter from the fourth quarter of 2016. The company expects earnings to be in the range of $1.25 to $1.35 per share for the first quarter of 2017.

Price Performance

Reliance Steel has outperformed the Zacks categorized Metal-Products Distributor industry over the past three months. The company's shares gained 12.6% over this period while the industry saw a decline of 29.2%.



Zacks Rank & Key Picks

Reliance Steel is a Zacks Rank #2 (Buy) stock.

Other well-placed companies in the basic materials space include United States Steel Corporation X, Ternium S.A. TX and Methanex Corporation MEOH, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

U.S. Steel has an expected long-term growth of 8%.

Ternium has an expected long-term growth of 18.4%.

Methanex has an expected long-term growth of 15%.

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