The company surpassed the Zacks Consensus Estimate for earnings in all of the last four quarters. It delivered a trailing four-quarter earnings surprise of 13.4% on average. It pulled off an earnings surprise of 31.3% in the last reported quarter.
Reliance Steel is expected to have benefited from strong demand in key markets in the first quarter. The healthy demand in non-residential construction, strength in the semiconductors market and increased production rates by automotive manufacturers are expected to have aided company’s performance.
However, lower selling prices might have been a drag on company’s sales and margins in the quarter to be reported.
RS’ shares have surged 26% in the past year against the industry’s fall of 10.8%.
Image Source: Zacks Investment Research
What Do the Estimates Say?
The Zacks Consensus Estimate for revenues for Reliance Steel for the first quarter is currently pegged at $3,946 million, indicating a 12% fall from the year-ago reported number.
The Zacks Consensus Estimate for shipments for the quarter currently stands at 1,427,000 tons, implying a 0.6% year-over-year rise and an 11% sequential increase. The consensus estimate for average prices per ton sold stands at $2,717, suggesting a decline of 15% year over year and 3% sequentially.
Some Factors to Note
RS is likely to have gained from healthy demand across its major markets, including non-residential construction, semiconductors and automotive, in the March quarter. These factors are expected to have supported its performance, despite headwinds from uncertain macroeconomic conditions, geopolitical factors and supply chain disruptions.
Inorganic growth strategies adopted by the company are also expected to have aided its performance in the first quarter. Reliance Steel is likely to have witnessed continued strong demand in the semiconductor market. Furthermore, the company is expected to have benefited from increased demand for its toll processing services in the automotive sector due to automakers ramping up their production rates. Moreover, it might have gained from the upswing in demand for commercial aerospace in the first quarter.
However, it is likely to have faced pricing pressure in the first quarter. Reliance Steel, on its fourth-quarter call, said that it anticipates the average selling price per ton sold to be down 3-5% sequentially in the first quarter. Sequentially lower selling prices are expected to have affected its first-quarter performance.
Our proven model does not conclusively predict an earnings beat for Reliance Steel this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case.
Earnings Beat: Earnings ESP for Reliance Steel is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at $5.70. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Reliance Steel currently carries a Zacks Rank #3.
Stocks That Warrant a Look
Here are some companies in the Industrial Products space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
Barnes Group Inc. B, scheduled to release earnings on Apr 27, has an Earnings ESP of +1.27% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for Barnes Group’s first-quarter earnings has been revised 0.9% upward in the past 60 days. The consensus estimate for B’s earnings for the first quarter is currently pegged at 40 cents.
Applied Industrial Technologies, Inc. AIT, scheduled to release earnings on Apr 27, has an Earnings ESP of +3.30% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for AIT’s earnings for the fiscal third quarter is currently pegged at $2.12.
A. O. Smith Corporation AOS scheduled to release earnings on Apr 27, has an Earnings ESP of +10.19% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for AOS’ first-quarter earnings has been revised 0.6% upward in the past 60 days. The consensus estimate for AOS’ earnings for the first quarter is currently pegged at 77 cents.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.