Yahoo Finance Reliance Steel (RS) Up 16% in 6 Months: What's Driving It?
Reliance Steel & Aluminum Co.’s RS shares have gained 16% over the past six months. The company has also outperformed its industry’s rise of 3.2% over the same time frame. It has also topped the S&P 500’s roughly 4.7% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.
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What’s Aiding RS?
Forecast-topping earnings performance in the first quarter of 2023 and upbeat prospects have contributed to the gain in the company's shares. Its adjusted earnings of $6.37 per share for the first quarter topped the Zacks Consensus Estimate of $5.70.
Net sales of $3,965.3 million for the first quarter also beat the Zacks Consensus Estimate of $3,945.7 million. The company benefited from strong demand in most of its end markets and its organic growth investments. It saw higher shipments in the quarter.
Reliance Steel is riding on strong underlying demand in its major markets. It envisions healthy demand to continue in the second quarter of 2023.
Demand in non-residential construction, the company’s biggest market, improved in the first quarter. The company is optimistic that demand for non-residential construction activity in the areas in which it operates will remain at healthy levels in the second quarter.
Reliance Steel also witnessed higher year over year demand in the semiconductors market in the first quarter. RS expects the semiconductor market to remain strong and its long-term outlook for semiconductor demand remains favorable.
Demand across the broader manufacturing sectors that it serves improved modestly and the company sees stable demand in the second quarter. Demand in energy (oil and natural gas) improved year over year in the first quarter and the company is cautiously optimistic that demand will remain steady in the second quarter.
The company also witnessed higher demand for the toll processing services that it provides to the automotive market and expects demand to increase in the second quarter. Additionally, demand in commercial aerospace improved during the first quarter and the company is cautiously optimistic that demand will continue to improve in the second quarter.
Reliance Steel has also been following an aggressive acquisition strategy for a while as part of its core business policy to drive operating results. The acquisitions of Rotax Metals, Admiral Metals and Nu-Tech Precision Metals are in sync with its strategy of investing in high-quality businesses.
The company also remains committed to boost returns to shareholders. It repurchased shares worth $38.9 million in the first quarter. The company returned $100.9 million to its stockholders during through dividends and the repurchases in the quarter. Reliance Steel, in Feb 2023, also increased its quarterly dividend by 14.3% to $1.00 per share.
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include L.B. Foster Company FSTR, Nucor Corporation NUE and Linde plc LIN.
L.B. Foster currently carries a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for FSTR's current-year earnings has been stable over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
L.B. Foster’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 140.5%, on average. FSTR has gained around 2% in a year.
Nucor currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for NUE’s current-year earnings has been revised 13.4% upward in the past 60 days.
Nucor beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 10.8% on average. NUE’s shares have gained roughly 13% in the past year.
Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days.
Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. LIN’s shares have gained roughly 14% in the past year.
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Nucor Corporation (NUE) : Free Stock Analysis Report
Reliance Steel & Aluminum Co. (RS) : Free Stock Analysis Report
L.B. Foster Company (FSTR) : Free Stock Analysis Report
Linde PLC (LIN) : Free Stock Analysis Report
