Schnitzer Steel Badly Misses Targets, Again

Shares of Schnitzer Steel(SCHN Quote) lost 12% of their value Tuesday after the company reported quarterly results that fell terribly short of Wall Street's already reduced bottom-line forecasts.

For its fiscal third quarter ended in April, Schnitzer said it lost 5 cents a share, when analysts had been expecting a profit of 16 cents. This marks the second-straight quarter that the Portland, Ore., scrap-metal recycler badly missed expectations of a profit by coming out with a loss.

Schnitzer shares were trading midday Tuesday at $52.99, down 12%, or $7.22, on more than double the daily average volume. The stock has performed well this year, gaining 60%, but is still trading far below its all-time highs -- about $111 -- reached almost exactly a year ago.

The reasons for Schnitzer's poor performance are fairly obvious: Demand for steelmaking raw materials have collapsed amid the recession. Schnitzer derives 77% of its revenue from the recycling of scrap metal and its resale (it also sells auto parts scavenged from junkers and manufactures a bit of steel), and in that core business, prices for ferrous metals, its main product, were more than cut in half compared to the same period in 2008.

As a result, third-quarter revenue from its metal-recycling business plunged to $318 million from $810 million a year ago.

Still, in a press release before the opening bell Tuesday, the company said early signs indicate that prices have improved in the ongoing fiscal fourth quarter, and should increase sequentially compared with the just-ended period. Schnitzer didn't provide any hard figures.