Reliance Steel (RS) Hits 52-Week High: What's Aiding It?
Reliance Steel & Aluminum Co.’s RS shares touched a 52-week high of $271.35 on Jun 29, before closing at $270.81.
Over the past year, Reliance Steel has gained 59.4%, compared with the industry’s 17.1% rise in the same period.
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What’s Driving Reliance Steel?
Reliance Steel is experiencing positive market conditions across several sectors. In the non-residential construction market, which is its largest market, demand improved in the first quarter and the company foresees this trend continuing into the second quarter. Similarly, the semiconductor market witnessed higher year-over-year demand in the first quarter. Reliance Steel expects this market to remain strong, with a favorable long-term outlook.
The broader manufacturing sectors served by Reliance Steel also saw modest improvements in demand. The company anticipates stable demand in the second quarter. The energy sector, including oil and natural gas, showed year-over-year improvement in the first quarter, and Reliance Steel cautiously expects demand to remain steady in the second quarter.
Moreover, Reliance Steel experienced increased demand for its toll processing services in the automotive market and foresees further demand growth in the second quarter. Additionally, demand in the commercial aerospace sector improved during the first quarter and the company is cautiously optimistic that this trend will continue in the second quarter.
Reliance Steel's growth strategy includes an aggressive acquisition approach, which aligns with its core business policy to drive operating results. Recent acquisitions, such as Rotax Metals, Admiral Metals and Nu-Tech Precision Metals, reflect its focus on investing in high-quality businesses.
Furthermore, the company remains committed to enhancing shareholder returns. In the first quarter, Reliance Steel repurchased shares worth $38.9 million and returned $100.9 million to stockholders through dividends and repurchases. In February 2023, the company increased its quarterly dividend by 14.3% to $1.00 per share.
Also, the company delivered an earnings surprise in all the trailing four quarters, with the average surprise being 12.15%. Earnings estimates have witnessed an 11.2% upward revision for the second quarter in the past 60 days.
Reliance Steel & Aluminum Co. Price and Consensus
Reliance Steel & Aluminum Co. price-consensus-chart | Reliance Steel & Aluminum Co. Quote
Zacks Rank & Key Picks
Reliance Steel currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space include L.B. Foster Company FSTR, carrying a Zacks Rank #1 (Strong Buy), and Koppers Holdings Inc. KOP and Linde Plc LIN, carrying a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for L.B. Foster’s current-year earnings is pegged at 53 cents per share, indicating year-over-year growth of 112.5%. The company’s shares have gained around 10.6% over the past year. FSTR beat the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 140.5%, on average.
Koppers currently carries a Zacks Rank #2. The consensus estimate for current-year earnings for KOP is currently pegged at $4.40, implying year-over-year growth of 6.3%. Koppers’ shares have rallied roughly 48.8% in the past year.
The Zacks Consensus Estimate for Linde’s current-year earnings has been revised 4.4% upward in the past 60 days. LIN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 6.9%. The company’s shares have gained 31.9% in the past year.
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