FRD - Friedman Industries: Decent Q4 FY24 Results But Still Not Cheap

2024-06-17 14:31:18 ET

Summary

• The company booked a net income of $5 million for Q4 FY24 despite rising processing and warehousing expenses and lower HRC steel prices.
• The sales volume grew by 13%, and I think it could continue to improve in FY25.
• However, I think that HRC steel prices could stabilize at around $600/t over the coming months as China’s economic recovery is still sluggish.
• In addition, Friedman Industries doesn’t look cheap based on historical financial multiples as the price to tangible book value is 0.89x.

Introduction

I’ve been following Friedman Industries (NYSE: FRD ) closely, and I’ve written six articles about the company on SA to date. The latest of them was in December 2023 when I said that the Sinton facility seemed to be struggling with the ramp-up of production and that the valuation of the company was starting to look stretched....

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