- Olympic reported exceptional sales growth as machinery customers and other industrial companies scramble to fill swelling order books.
- Margins are well above long-term norms, with segment-level EBITDA margins above 10% in Carbon Flat and Specialty, but the long-term EBITDA and FCF margin track record is weak.
- Management is looking to improve long-term operating efficiency, shift its mix towards more higher-value Specialty and Tubular products, and also use M&A to add more value-added offerings.
- It's not too hard to get a fair value in the mid-to-high $30s today, but working through higher-cost steel will impact margins and this is not a stock you want to own when the cycle cools off.
For further details see:
Olympic Steel Prospering On Recovery Demand, But Normalization Could Whipsaw Investors