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Are Investors Undervaluing Reliance Steel (RS) Right Now?

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  • RS

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Reliance Steel (RS). RS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Another notable valuation metric for RS is its P/B ratio of 1.77. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P /B looks solid versus its industry's average P/B of 2.25. Over the past 12 months, RS's P/B has been as high as 2.11 and as low as 1.44, with a median of 1.69.

Finally, we should also recognize that RS has a P/CF ratio of 7.89. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. RS's current P/CF looks attractive when compared to its industry's average P/CF of 15.97. Over the past year, RS's P/CF has been as high as 16.84 and as low as 6.73, with a median of 12.37.

Value investors will likely look at more than just these metrics, but the above data helps show that Reliance Steel & Aluminum Co. Is likely undervalued currently. And when considering the strength of its earnings outlook, RS sticks out at as one of the market's strongest value stocks.


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