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Reliance Steel (RS) Updates Earnings Guidance for Q2

Zacks Equity Research

Reliance Steel & Aluminum Co. RS has updated its earnings guidance for the second quarter ending Jun 30, 2017.


The company now anticipates earnings per share in the range of $1.30–$1.40 for the second quarter of 2017, compared with the previous outlook of $1.50–$1.60 per share.


Reliance Steel said that the favorable momentum it witnessed with respect to demand and price in the first quarter of 2017 did not accelerate into the second quarter as it had expected earlier owing to challenging market conditions. The company’s gross profit margin witnessed a downward pressure due to increased uncertainty in metals pricing.


Reliance Steel has outperformed the Zacks categorized Metal-Products Distributor industry over the last six months. The company's shares lost 12.7% over this period while the industry saw a decline of 46.1%.



Reliance Steel is likely to gain from strong momentum across automotive and aerospace markets. The company expects sustained momentum across these markets in 2017. It should also benefit from its aggressive acquisition strategy, broad and diversified product base and wide geographic footprint.


However, the company’s business in the energy markets is expected to remain under pressure due to depressed oil pricing. While there has been some recovery of late in the non-residential construction market (Reliance Steel’s biggest end-market), demand still remains significantly below the peak levels achieved in 2006. This key end-use market remains on a slow road to recovery. The steel industry also suffers from fundamental issues including low capacity utilization, cheaper imports, excess supply and inventory glut.


Reliance Steel & Aluminum Co. Price and Consensus


Reliance Steel & Aluminum Co. Price and Consensus | Reliance Steel & Aluminum Co. Quote

Zacks Rank & Key Picks 


Reliance Steel currently carries a Zacks Rank #3 (Hold).


Some better-ranked companies in the industrial product space include Caterpillar, Inc. CAT, Deere & Company DE and AGCO Corporation AGCO. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


Caterpillar has expected long-term growth of 9.5%.


Deere & Company has expected long-term growth of 9.2%.


AGCO Corp has expected long-term growth of 12.1%.


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