This steel and aluminum company beat analysts’ EPS estimates by $0.35 last quarter. The shares have a current dividend yield of 2.86%, paid quarterly.
Reliance Steel & Aluminum Co. (RS)
From IQ Trends
Reliance Steel & Aluminum was founded in 1939 and is the largest metals service center company in North America. RS provides materials management and metals processing services, and it distributes a full line of more than 100,000 metal products, including carbon, alloy, stainless and specialty steel, aluminum, brass, and copper products to more than 125,000 customers in a broad range of industries.
Due to RS’s focus on small orders, decentralized operating structure and the diversity of the markets RS serves, the company’s largest customer represented only 1.0% of net sales in 2019. In 2019, RS’s average order size was $2,090; approximately 51% of the company’s orders included value-added processing and around 40% of the orders were delivered within 24 hours from receipt of the order.
Historically, RS has expanded through both acquisitions and internal growth. Since its initial public offering in September 1994, RS has successfully purchased 67 businesses. The company’s internal growth activities during the last few years, which are supported by its capital expenditures, have been at historically high levels for RS and have included opening new facilities, adding to the company’s processing capabilities and relocating existing operations to larger, more efficient facilities.
Investments in processing equipment have increased the range of value-added services that the company provides and increased its efficiency, which has likely contributed to its recent gross profit margin improvements. RS thinks these investments also differentiate the company from its competitors and has helped RS increase its market share.
RS expects to continue to grow its business through acquisitions and internal growth initiatives, particularly those that will diversify its products, customer base and geographic locations and increase its sales of specialty products and high margin, value-added processing.
Kelley Wright, IQ Trends, iqtrends.com/, info@iqtrends.com, 866.927.5250, Mid-May 2020