Why Should You Add Reliance Steel (RS) Stock to Your Portfolio
Reliance Steel RS is marching ahead, propelled by solid momentum, favorable market conditions and a resolute dedication to strategic expansion.
As a Zacks Rank #2 (Buy) stock, it presents an attractive investment option with growth prospects and an impressive earnings track record.
Estimates Going Up
The Zacks Consensus Estimate for RS's 2023 earnings has increased approximately 4% over the past two months.
Positive Earnings Surprise History
Reliance has outperformed the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter average earnings surprise of around 12.2%.
Price Performance
RS has shown strong price performance, gaining 60.9% in the past year, outperforming the industry's rise of 19.4% during the same period.
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Positive Market Conditions and Strategic Initiatives
Reliance Steel is basking in the glow of a strong market environment, as several sectors showcase positive conditions. The non-residential construction market, its largest market, experienced an upswing in demand during the first quarter and the company is optimistic of this trend continuing in the second quarter.
Additionally, the semiconductor market demonstrated robust year-over-year demand in the first quarter, with a promising outlook for sustained growth. Moreover, the broader manufacturing sectors also saw modest improvements in demand, fueling Reliance's confidence in anticipating stable demand throughout the second quarter. The energy sector, encompassing oil and natural gas, showcased year-over-year improvement in the first quarter, fostering cautious hope for continued demand stability in the second quarter.
The automotive market has also been a bright spot for Reliance Steel, with increased demand for its toll-processing services during the first quarter. The company envisions further growth in this sector during the second quarter. Similarly, the commercial aerospace sector experienced heightened demand in the first quarter, leading Reliance Steel to cautiously anticipate a continuation of this upward trend in the second quarter.
Emphasizing its commitment to growth, Reliance Steel employs an aggressive acquisition strategy, making investments in high-quality businesses like Rotax Metals, Admiral Metals, and Nu-Tech Precision Metals. This strategic approach aligns seamlessly with its core business policy of driving operational results.
Furthermore, Reliance Steel remains steadfast in its dedication to enriching shareholder returns. It returned $100.9 million to stockholders through dividends and repurchases in the first quarter. The 14.3% increase in the quarterly dividend in February 2023 also serves as a testament to its unyielding commitment to rewarding its investors. Bolstered by a promising market outlook and a solid foundation of strategic initiatives, Reliance Steel is well-poised to enjoy continued success moving ahead.
Zacks Rank & Other Key Picks
Other top-ranked stocks in the Industrial Products space include A. O. Smith Corporation AOS, sporting a Zacks Rank #1 (Strong Buy), and W.W. Grainger, Inc. GWW and Caterpillar Inc. CAT, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AOS’s current-year earnings is pegged at $3.47, indicating year-over-year growth of 10.5%. AOS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 8%. The company’s shares have rallied 32.2% in the past year.
The Zacks Consensus Estimate for GWW’s current-year earnings has been revised 7.7% upward in the past 90 days. GWW beat the Zacks Consensus Estimate in the last four quarters, with the average earnings surprise being 9.2%. The company’s shares have gained 61.2% in the past year.
The Zacks Consensus Estimate for CAT’s current-year earnings has been revised 1.4% upward in the past 60 days. CAT beat the Zacks Consensus Estimate in three of the last four quarters, while missing in one quarter. It delivered a trailing four-quarter earnings surprise of 14.3% on average. The company’s shares have risen roughly 46.6% in the past year.
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Caterpillar Inc. (CAT) : Free Stock Analysis Report
Reliance Steel & Aluminum Co. (RS) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
