Reliance Steel & Aluminum Co.
Reliance Steel & Aluminum Co (NYSE:RS), metals service center company yesterday announced that they be cutting their second quarter 2017 guidance numbers.
Reliance now expects their second quarter diluted earnings to be in between $1.30 to $1.40 per share which is down from previous guidance numbers of $1.50 to $1.60 per share.
Reliance Steel & Aluminum Co. Comments
“As a result of challenging market conditions, the positive momentum experienced for both demand and pricing trends in the first quarter of 2017 did not accelerate as originally anticipated into the second quarter of 2017. In addition, increased uncertainty in regard to metals pricing has placed downward pressure on the Company’s gross profit margin. Despite these changes in market conditions, Reliance continues to believe that it can sustain a reported LIFO gross profit margin within the range of 27% to 29%.” Globe Newswire
RS Technical Analysis
RS opened trading yesterday at $72.99 which was up from the previous day’s trading close of $72.44. RS closed trading yesterday at $72.51 and crashed down after market to $67.70, equivalent to a 7% decrease from the closing price.
Taking a look at the daily chart we can see the last time RS traded below these levels we have to go back to November 4th, 2016 when it traded at $67.03. Taking a closer look at the daily chart we can see that before the spike down RS had already been in an overall downward trend dating back to March 1st when it traded at $86.27. RS has a float of 70.41 million shares and traded below the normal daily trading volume on Monday.
For trading purposes, I would like to see RS open trading on Tuesday below $69.30 and if it does I would be looking to take a short position at the bell. My stop loss would be $0.30 from my entry position fearing anything more than that and the stock would start to fill in the gap down.
Company Profile
Reliance Steel & Aluminum Co. operates as a metals service center company. The company provides metals processing services and distributes a line of approximately 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and specialty steel products. Its primary processing services comprise cutting, leveling, sawing, machining, and electro-polishing.
The company also fabricates and distributes structural steel components and parts; offers inventory management services; distributes alloy, carbon, and stainless steel bar and plate products; steel and non-ferrous metal products; and aerospace metals, including aluminum, steel, titanium, nickel alloys, and aluminum bronze, offering full or cut to size materials.
It serves general manufacturing, non-residential construction, transportation, aerospace and defense, energy, electronics and semiconductor fabrication, and heavy and auto industries. The company sells its products to original equipment manufacturers, small machine shops, and fabricators.
It operates through a network of metals service centers in approximately 300 locations in 39 states in the United States, as well as in Australia, Belgium, Canada, China, France, Malaysia, Mexico, Singapore, South Korea, Turkey, the United Arab Emirates, and the United Kingdom. Reliance Steel & Aluminum Co. was founded in 1939 and is headquartered in Los Angeles, California.