Reliance Steel (RS) Shares Rise 22% In 3 Months: Here's Why

Reliance Steel & Aluminum Co. (NYSE:RS) shares have popped 22.4% over the past three months. The company has also outperformed its industry’s growth of 20.4% over the same time frame.

Reliance Steel has a market cap of $7.9 billion and average volume of shares traded in the last three months is around 519.1K. The company has expected long-term earnings per share (EPS) growth of 9%.

Let’s take a look into the factors that are driving the Zacks Rank #2 (Buy) stock.

What’s Driving Reliance Steel?

Better-than-expected earnings performance in the third quarter of 2019 has contributed to gain in Reliance Steel’s shares. The company’s adjusted earnings per share of $2.39 for the quarter surpassed the Zacks Consensus Estimate of $1.97.

Notably, Reliance Steel outpaced the Zacks Consensus Estimate in three of the trailing four quarters. The company has a positive earnings surprise of 1.6%, on average, for the same timeframe.

Reliance Steel is gaining from sustained demand strength across aerospace and automotive markets, focus on high-margin products, and acquisitions.

The company is seeing healthy demand for heat-treated aluminum products in the aerospace markets. Demand in aerospace was healthy in the third quarter, with strong order backlog. Reliance Steel remains committed to boosting its market share in aerospace.

Further, the company is witnessing strong demand for processing services in the automotive market. It remains committed to investing in facilities and value-added processing equipment to address the rising demand for the services it offers.

The company also continues with its aggressive acquisition strategy to tap growth opportunities. Notably, the acquisition of All Metals Holding complements its growth strategy and meets its requirements of buying high-quality businesses, which are immediately accretive to its earnings. All Metals bolsters Reliance Steel’s toll processing and logistics services businesses.

In its third-quarter earnings call, Reliance Steel informed that it is optimistic about business prospects for the fourth quarter. Excluding the impact of normal seasonal patterns, it expects end demand to stay relatively steady in the fourth quarter compared with the third quarter. The company projects an adjusted EPS of $1.60-$1.70 for the fourth quarter.

Reliance Steel & Aluminum Co. Price and Consensus

Reliance Steel & Aluminum Co. price-consensus-chart | Reliance Steel & Aluminum Co. Quote

Other Stocks to Consider

Some other top-ranked stocks in the basic materials space are Impala Platinum Holdings Ltd. (OTC:IMPUY) , currently sporting a Zacks Rank #1 (Strong Buy), and Franco-Nevada Corporation (TSX:FNV) and Agnico Eagle Mines Limited (NYSE:AEM) , carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Impala Platinum Holdings has a projected earnings growth rate of 255.2% for 2019. The company’s shares have rallied 240.8% in a year.

Franco-Nevada has a projected earnings growth rate of 46.2% for 2019. The company’s shares have rallied 41.7% in a year.

Agnico Eagle has an estimated earnings growth rate of 168.6% for the current year. Its shares have moved up 65.4% in the past year.

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