NEW YORK (
-- Reliance Steel and Aluminum
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, impressive record of earnings per share growth, compelling growth in net income, robust revenue growth and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- RS's revenue growth trails the industry average of 47.3%. Since the same quarter one year prior, revenues rose by 31.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Metals & Mining industry average. The net income increased by 106.7% when compared to the same quarter one year prior, rising from $44.65 million to $92.30 million.
- RELIANCE STEEL & ALUMINUM CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, RELIANCE STEEL & ALUMINUM CO increased its bottom line by earning $2.61 versus $2.01 in the prior year. This year, the market expects an improvement in earnings ($4.50 versus $2.61).
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
Reliance Steel & Aluminum Co. operates metals service centers. The company has a P/E ratio of 16, equal to the average industrial industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Reliance Steel and Aluminum has a market cap of $3.9 billion and is part of the
industry. Shares are up 0.4% year to date as of the close of trading on Monday.
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