In December 2018, Ryerson Holding Corporation (NYSE:RYI) released its earnings update. Generally, analyst consensus outlook appear bearish, with earnings expected to decline by -39% in the upcoming year. However, this pessimism is not unfounded, given the 5-year track record of negative growth. Currently with a trailing-twelve-month profit of US$106m, the consensus growth rate suggests that earnings will drop to US$65m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is Ryerson Holding going to perform in the near future?
The longer term expectations from the 4 analysts of RYI is tilted towards the negative sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of RYI's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of -1.7% based on the most recent earnings level of US$106m to the final forecast of US$97m by 2022. This leads to an EPS of $2.56 in the final year of projections relative to the current EPS of $2.84. The bottom-line decline seems to be caused by cost growth exceeding top-line growth of 3.8% in the next three years. With this high cost growth, margins is expected to contract from 2.4% to 2.0% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Ryerson Holding, I've compiled three fundamental aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Ryerson Holding worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Ryerson Holding is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Ryerson Holding? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.