Reliance Steel & Aluminum ( NYSE: RS ) is started with an Outperform rating and $230 price target at BMO Capital, which said a healthy balance sheet and resilient free cash flow offer optionality even in a declining price environment, and the company's margin-enhancing investments could open the door for additional increases in valuation.
Reliance ( RS ) is a "best-in-class" metals distributor and processor, with "unmatched geographic and product diversification and value-added processing capabilities [with a] clean balance sheet, counter-cyclical free cash flow and ample liquidity," according BMO analyst Katja Jancic.
The company's "scope and scale, focus on small orders and transactional or spot-type of business (high margin), and increasing levels of value-added processing... have translated to gross margins consistently above peers (and growing) and more resilient through-cycle profitability vs. most peers," Jancic wrote.
Reliance Steel ( RS ) recently reported slightly better than expected Q2 adjusted earnings of $9.15/share on revenues of $4.68B .
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Reliance Steel started at Outperform as BMO's 'best-in-class' metals distributor