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Bear of the Day: Olympic Steel (ZEUS)

Kevin Cook

Olympic Steel (ZEUS) is a $165 million US metals service center focused on the direct sale and distribution of large volumes of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel and aluminum products. 

 

The Company's CTI subsidiary is a leading distributor of steel tubing, bar, pipe, valves and fittings, and fabricates pressure parts for the electric utility industry.

 

ZEUS was a Zacks #5 Rank Strong Sell for most of Q1 when it was trading above $18. It will remain in the cellar for some time now following the company's Q1 report on May 2.

 

Olympic Steel came out with quarterly earnings of $0.18 per share, missing the Zacks Consensus Estimate of $0.22 per share. This compares to earnings of $0.70 per share a year ago. These figures are adjusted for non-recurring items.

 

This quarterly report represents an earnings surprise of -18%. A quarter ago, it was expected that this steel maker would post earnings of $0.17 per share when it actually produced earnings of $0.14, delivering a surprise of -17.65%.

 

Olympic Steel, which belongs to the Zacks Steel Producers industry, posted revenues of $445.92 million for the quarter ended March 2019, surpassing the Zacks Consensus Estimate by 6.70%. This compares to year-ago revenues of $375.60 million. The company has topped consensus revenue estimates all four times over the last four quarters.

 

But as you can see in the Detailed Estimates tables below, sales are expected to decline for two consecutive years and earnings are forecasted to plunge 66% in 2019...

 

 

While the direct impacts of the trade war with China upon ZEUS are not known at this time, all we really need to know is the analyst consensus for this year's EPS has dropped over 40% from $1.70 to $1.00 in just the past few weeks.

 

There may be a time to add ZEUS to your portfolio as it tests 3-year lows under $14, but that time is not now. The Zacks Rank will let you know when it's safe again.

 

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