skip to content
  1. Home
  2. >
  3. Questions
  4. >
  5. RUS: What is your updated view on Russel Metals after their latest earnings report and large acquisition (Samuel $225M) in December. [Russel Metals Inc.]
You can view 2 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: What is your updated view on Russel Metals after their latest earnings report and large acquisition (Samuel $225M) in December. Net cash position and commentary on some recent and future CapEx focused on value added moderinazation projects to expand margins. It seems like something has changed with the company finally breaking out from the 30-35 range it has been in for 15 years.

John Reid
"It's definitely been a very robust market compared to anything I've seen and really the sustainability of that over 3 years...So the demand has been very good and also price of steel has been very good... And so, yes, it's been a really nice ride for the last 3 years and we don't see anything really pulling back on that next or I guess the next 2 or 3 years as far as we can see out, we just don't see anything to change that right now."
Asked by Michael on February 16, 2024
5i Research Answer:

The quarter was solid with a 9% beat on EPS and a 5% beat on EBITDA. Inventories are down to six-year lows. The balance sheet has shifted to a new ($200M) cash position after years of being modestly-to-highly leveraged. Free cash flow is growing and the share count is (slowly) coming down. With the positive commentary, there is a lot to like here. It is still going to be cyclical, but remains cheap at 12X earnings, while its financial strength is in better shape than it has been for years. Assuming no economic collapse, we would expect another dividend increase this year. The stock is up 33% in the past 52 weeks, so not exactly a wallflower. It hit an all-time high yesterday which of course we view as a positive sign. We also note (a bit) some insider buying in the past six months. Overall, we think this is setting up quite well.