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The must-know investor outlook for Reliance Steel & Aluminum

Mohit Oberoi

Must-know: An overview of Reliance Steel & Aluminum (Part 9 of 9)

(Continued from Part 8)

The outlook for Reliance Steel & Aluminum

Up to now, we’ve analyzed the various business and financial aspects of Reliance Steel & Aluminum. In this part of the series, we look at the factors that will affect Reliance Steel & Aluminum’s business. Analysts expect these factors to drive future earnings, so they’re a guiding factor for Reliance’s share price.

  • Demand from key buyers: We’e seen that Reliance Steel & Aluminim has a very wide and diversified customer base. Still, demand for its products is guided by the dynamics of key industries. The chart above shows you the expected demand situation in key industries where Reliance supplies its products. As you can see, Reliance’s management is hopeful of strong demand from most of its end markets. Overall demand for the company’s products is expected to be strong.
  • Acquisitions to further drive growth: You’ve seen so far that Reliance uses acquisitions as a strategic growth tool. The latest company acquired by Reliance is Aluminum Services UK Limited. This company is the parent company for All Metal Services, which is the world’s largest raw material supplier to the aerospace and defense industries. All Metal Services supports customers in more than 40 countries. So this deal is important, given the current and expected growth in aerospace industries.

David H. Hannah, Reliance’s chairman and CEO, made the following comment on this acquisition: “We are excited to expand our aerospace presence in this growing market.”

Resilience in the U.S. economy—along with strong demand from key buyers—should help Reliance Steel & Aluminum (RS) and other steel companies like ArcelorMittal ADR (MT), United States Steel Corporation (X), and Nucor Corporation (NUE). You can also access the industry through the SPDR S&P Metals and Mining ETF (XME).

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