Reliance Steel's (RS) Q3 Earnings Beat, Revenues Trail
23 October 2015
Reliance Steel RS is a leading metals service centre company engaged in value-added materials management and metals processing services. It distributes metal products including stainless steel, aluminum, brass, copper, titanium and alloy steel to customers across a vast spectrum of industries.
Reliance Steel is well placed to leverage the strong momentum across a number of end markets, including automotive and aerospace. Strategic acquisitions and expansion of existing operations should also support its results. But it remains challenged by weak steel industry fundamentals and contends with soft steel and metals pricing environment.
Let's have a quick look at this metal processor's third-quarter 2015 release.
Estimate Trend & Surprise History
Investors should note that the earnings estimate for Reliance Steel for the third quarter has been stationary over the past month. Reliance Steel has missed the Zacks Consensus Estimate in 2 of the trailing 4 quarters with an average positive surprise of 6.61%.
Reliance Steel logged adjusted earnings of $1.16 per share that beat the Zacks Consensus Estimate of $1.03 by a wide margin.
Reliance Steel recorded net sales of $2,286.2 million, down 15.5% year over year, missing the Zacks Consensus Estimate of $2,387 million.
Key Stats/Developments to Note
Overall sales volume fell 3.9% year over year in the quarter with average prices per ton going down 12.7% year over year. Moving forward, the company anticipates the U.S economy to witness slow but modest growth. However, it sees persisting challenges for its business activities and metal pricing in the fourth-quarter 2015. These factors led the management to expects overall sales volumes to decrease by around 4−5% sequentially in the fourth quarter of 2015. Reliance Steel also anticipates lower metal pricing for most of its products for the rest of 2015. The company also anticipates average selling price to fall by 1−2% sequentially in the fourth quarter. The company's expects earnings for the fourth quarter in the band of 75 to 85 cents per share.
Reliance Steel currently has a Zacks Rank #4 (Sell), but that could change following the company's earnings report which was just released.
Reliance Steel's shares were inactive following the release. It would be interesting to see how the market reacts to the results during the trading session today.