Reliance Steel & Aluminum Co. (RS) Beats Both Earnings and Sales

Value-added materials management company Reliance Steel & Aluminum Co. (RS), delivered positive earnings news to shareholders on Thursday, actually beating Wall Street estimates in a sound fashion.

RS delivered adjusted earnings per share of $1.22, a good 22 cents above a consensus estimate of $1.00. This is impressive given the slow rate of growth across the global economy generally. Slowdown in China and India, not to mention the US, have ensured that only a few companies in the materials management space can boast solid numbers.

This was one of the better quarterly performances for RS. The company announced Q4 2017 revenue of $2,376.4M, a sizable 15% jump on the figures recorded for the same quarter a year earlier. Analysts had predicted a quarterly earnings figure of $2,307M so the announced figure was really good news for investors. It showed that while many other companies in the space have been struggling to find their footing, RS has been positioning itself and executing well in order to deliver on shareholder expectations.

The strong numbers also tell a underlying story about the performance of RS over several quarters. The company has actually been producing strong numbers for the trailing four quarters, beating one analyst by an overall 7.2%. Looking ahead RS has put out some strong numbers, too. The company has projected that tons sold (of materials) will go up 6 – 8% for the first quarter of 2018. This projection is based on a sequential comparison basis. RS also expects average selling price to go up by 4 – 6%, a massive improvement on the projections from many quarters ago.

But perhaps the biggest projection that is getting investors excited is RS numbers for earnings per share. The company has said that it expects earnings per share to rise from Q4’s numbers to between $1.90 to $2.00. This is a significant jump from existing numbers and points to a steady growth in the fortunes of materials management companies. No doubt RS will benefit from the proposed infrastructure plans outlined recently by the Trump administration. More than $1T in infrastructure spending is being tabled and although its unclear whether Trump will be able to get the plans approved, the projected spending is expected to benefit directly, companies like RS.

There is also some dividend buzz surrounding RS. The current payout ratio for the stock is 34.58% and although there have been predictions that this figure will decline; some analysts believe that the stock is worth exploring for its dividend paying capabilities.

 

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