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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Reliance Steel & Aluminum Co. (XNYS:RS) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
RS
Name:
RELIANCE STEEL & ALUMINUM CO. (XNYS:RS)
Sector:
337.30M
Industry:
Steel
CEO:
Mr. James Hoffman
Total Employees:
13,700
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is 0.49% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF RELIANCE STEEL & ALUMINUM CO.(RS) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND STEEL INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
183.92
One Month Price Target:
$184.77
Six Month Price Target :
$189.05
Likely Price in One Year's Time:
Ticker:
$194.18
Likely Trading Range Today Under (Normal Volatility)
$183.36
Price Upper limit ($) :
$184.81
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$175.29
This week:
$164.62
This month :
$145.31
Other Primary facts
Market Cap:
11.12B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
60.29M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
15.95%
-10.4%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$223.95
$205.38
$143.89
$162.46
Medium risk (<10%) entry points
Buy Call
Sell Call
$199.34
Buy Put:
Sell Put:
$195.38
$168.45
$172.46
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
RS
Sharpe Ratio:
3.43%
Comparison:
RS, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is -9.34% lower than the industry
& ratio is 50.48% higher than the market/S&P 500 average
Average Returns/Yield of
RS
Daily returns:
0.09%
Weekly returns:
0.44%
Monthly returns:
1.77%
Yearly returns:
34.75%
Comparison of returns:
Average annual returns/yield (last 3 years) is -38.72% below industry average
Classification:
RS, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.24
Statistical test of Returns:
RS has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.33%
Weekly Volatility:
5.21%
Monthly Volatility:
10.41%
Yearly Volatility:
36.08%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.62%
Volatility in last five trading days has been -30.53% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.69%
Weekly VaR:
-10.50%
Monthly VaR:
-20.99%
How Much Can the price of
RS
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-18%
Worst case (decline):
-72.72%
This translates to price declining to:
$151.65
This translates to price declining to:
$50.17
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
RS is a 48.16% riskier investment compared to the market/S&P 500 & is 26.93% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -41.44% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
RS
Beta in relation to market/S&P 500--0.83
Expected beta in 1 year's time:
0.63
Expected beta in 3 year's time:
0.89
Unlevered (debt free) Beta:
0.687
Beta in relation to Nasdaq (XNAS):
0.74
Beta in relation to all global stocks::
0.782
Beta Comparison & Analysis
Beta of competitors/peers::
1.742
Beta is -52.37% lower than peers
Average Industry Beta:
1.33
Beta is -37.61% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
17.92%
Sustainable growth rate is -62.49% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.125
Alpha is -44.59% below industry average alpha yield
Alpha is 793% higher than market/& is unsustainably high
Analysis of Cost of Capital of
RS
Equity cost of capital:
0.088
Equity cost of capital is -27.94% below industry mean WACC
Unlevered (without debt) cost of capital:
7.31%
Before-tax cost of debt:
3.36%
After-tax cost of debt:
2.66%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.66%
WACC is -20.16% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$261.07
Revenue growth rate per share of (3Y):
1.7
Annual revenue growth rate is -63.15% below industry average
EPS:
$26.20
Expected Annual growth rate of EPS (3Y):
27.94%
Expected future EPS growth rate is -52.99% lower than the Steel industry
Free cash flow (FCF) per share:
$12.46
Balance sheet equity growth per share: 37.85%
Equity growth rate per share is -312.50% lower than the industry
Debt per share
$29.89
EBITDA per share
$41.66
Valuation Analysis Today of
RS
P/E Ratio:
6.08
P/E Ratio of Competitors/Peers:
7.99
P/E ratio is -24.00% lower than main peers & is 40.37% higher than the industry
Stock price/value with industry average P/E ratio: $113.39
RS is 62.20% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $118.24
Present value of the expected future dividends only: $87.74
P/S (Price to Sales ratio):
0.7
Price to sales ratio is 16.07% above the industry mean
P/B (Price to book value ratio):
1.7
Price to free cash flow: 14.76
-
Net income growth rate (3Y):
152.33%
Net income growth rate is 6.70% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 3.40%
Dividend yeild: 1.70%
Previous Dividend: $0.88
Previous adjusted dividend: $0.88
Previous Dividend: $3.13
Expected next dividend best case: $0.96
Expected next dividend worst case: $0.79
Average dividend payment (long-term): $0.69
Average dividend increase/decrease (growth rate) % per period: 5.09%
Expected next dividend payment date: 09/08/2022
Expected next dividend record date: 25/08/2022
Expected next dividend declaration date: 25/07/2022
Previous dividend payment date: 06/10/2022
Previous dividend record date: 27/05/2022
Previous dividend declaration date: 26/04/2022
Dividend History:
2022-05-26--$0.88
2021-11-18--$0.69
2021-05-27--$0.69
2022-03-10--$0.88
2021-08-12--$0.69
2021-03-11--$0.69
Dividend growth rate is -116.88% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
27.59%
Net debt to equity ratio:
20.12%
Debt to assets ratio:
17.82%
Net debt to assets ratio:
12.99%
Debt-to-asset ratio is -63.97% below industry average
Ability to repay debt:
Interest coverage ratio:
40.13
Interest coverage ratio is 17.84% more than industry average
Looking forward:
Debt growth rate:
13.57%
Annual debt growth is 2008% higher than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.704
Statistical significance of correlation:
RS has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.523
Stock price is 34.71% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.523
Correlation of price movement with Nasdaq (^IXIC):
0.048
Covariance of price movement with the market:
0.065
Kurtosis
5.6
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.023
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
RS
Gross Profit Margin Ratio:
125%
Operating Profit Margin Ratio:
14.53%
Operating profit margin is -1.07% lower than the industry
Net Profit Margin Ratio:
125%
Effective Tax Rate:
24.65%
Effective tax rate is 34.04% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
25.56%
Return on equity (ROE) is -48.87% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
16.51%
Return on assets (ROA) is -14.78% lower than the industry
Financial Leverage:
1.2x
Current Ratio:
3.96
Current ratio is 50.64% above industry average
Cash Conversion Cycle (days):
45.7
Cash conversion cycle is 19.34% above industry average
The remaining useful life of property plant & equipment is: 2.1 years
Stock based compensation to net income ratio:
0.71%
In-depth Efficiency Analysis
Revenue generated per employee:
1.1M
Each employee generates -88% less revenue than industry average revenue per employee
EBITDA generated per employee:
183.4K
Each employee generates -93% less EBITDA than industry average revenue per employee
Profit generated per employee:
121.9K
Each employee generates -94% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
24.6K
Each employee generates -87% less free cash flow than industry average revenue per employee
Assets/Capital per employee
392.0K
Each employee generates -87% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
RS
KIRKLAND LAKE GOLD LTD. (XNYS:KL)
APA CORPORATION (XNAS:APA)
West Fraser Timber Co. Ltd. (XNYS:WFG)
Ternium SA (XNYS:TX)
SIBANYE STILLWATER LIMITED (XNYS:SBSW)
ALCOA CORPORATION (XNYS:AA)
CLEVELAND-CLIFFS INC. (XNYS:CLF)
Gold Fields Limited (XNYS:GFI)
RPM INTERNATIONAL INC. (XNYS:RPM)
Current Analyst Ratings
Strong buy�4%
Buy�17%
Hold�13%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
15.74B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
10.82B
4.92B
-
-
2.40B
-
173.30M
2.57B
-
62.60M
232.40M
2.51B
2.29B
1.67B
2.22B
547.50M
1.67B
Statement of Cash Flow
Date:
Period:
59.10M
Differed Income Tax :
- 400.00K
Stock Based Compensation :
11.80M
Change in Working Capital :
450.60M
Accounts Receivables:
- 399600.00K
Other Working Capital:
3.55B
Other Non-Cash Items:
- 640400.00K
Net Cash Provided by Operating Activities:
404.00M
Investments in PP&E:
- 66700.00K
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
548.00M
-
548.00M
2.08B
2.01B
107.00M
4.74B
2.07B
2.11B
1.06B
-
-
129.20M
5.37B
-
10.11B
636.20M
59.90M
141.30M
-
502.20M
1.20B
1.80B
99.40M
2.38B
-
3.58B
-
6.60B
- 68300.0K
100.00K
March 31, 2022 at 6:00:00 AM
13.39B
6.53B
10.11B
-
1.86B
1.3B
-
3.40M
- 63300.00K
-
-
-
- 56700.00K
- 35300.00K
- 92000.00K
- 1200.00K
247.50M
548.00M
300.50M
404.00M
- 66700.00K
337.30M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
RS
2023
2024
2025
2026
2027
$239.26
$252.60
$266.69
$281.56
$297.26