Sims (AU:SGM)
ASX:SGM
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Sims
(Sydney:SGM)
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Rating:53Neutral
Price Target:
AU$18.00
▼(-4.96% Downside)
Action:ReiteratedDate:04/01/26
The score is held back primarily by weak profitability and sharply declining free cash flow, alongside bearish technical momentum (price below key moving averages and negative MACD). Offsetting these risks, the latest earnings call was constructive with strong SLS and nonferrous trends and operational improvements, while valuation support is limited due to negative earnings and only a modest dividend yield.
Positive Factors
Nonferrous mix and pricing strength
A larger, higher‑value nonferrous mix (>40% of revenue) and sustained metal price gains materially improve margin resilience versus low‑value ferrous scrap. This structural shift supports higher gross realizations, steadier resale spreads and less reliance on volatile ferrous export markets over the medium term.
Negative Factors
Weak cash generation and elevated working capital
Large working capital tied to higher nonferrous inventory/receivables and derivative margining materially reduced free cash flow conversion. Persistently elevated WC and one‑off margin deposits constrain liquidity and limit capital flexibility for investment or buybacks until inventory and derivative positions normalize.
Read all positive and negative factors
Positive Factors
Negative Factors
Nonferrous mix and pricing strength
A larger, higher‑value nonferrous mix (>40% of revenue) and sustained metal price gains materially improve margin resilience versus low‑value ferrous scrap. This structural shift supports higher gross realizations, steadier resale spreads and less reliance on volatile ferrous export markets over the medium term.
Read all positive factors
Sims (SGM) vs. iShares MSCI Australia ETF (EWA)
Market Cap
AU$3.65B
Dividend Yield1.27%
Average Volume (3M)781.77K
Price to Earnings (P/E)―
Beta (1Y)1.47
Revenue Growth3.98%
EPS Growth70.79%
CountryAU
Employees3,887
SectorBasic Materials
Sector Strength58
IndustrySteel
Share Statistics
EPS (TTM)0.31
Shares Outstanding193,232,990
10 Day Avg. Volume762,054
30 Day Avg. Volume781,775
Financial Highlights & Ratios
PEG Ratio2.32
Price to Book (P/B)1.14
Price to Sales (P/S)0.39
P/FCF Ratio28.72
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
AU$21.95Price Target Upside15.89% Upside
Rating ConsensusHold
Number of Analyst Covering8
EPS Forecast (FY)1.09
Revenue Forecast (FY)AU$8.03B
Sims Business Overview & Revenue Model
Company Description
Sims Limited engages in buying, processing, and selling ferrous and non-ferrous recycled metals in Australia, Bangladesh, China, Turkey, the United States, and internationally. The company operates through six segments: North America Metals, Inves...
How the Company Makes Money
Sims makes money primarily by acquiring scrap and end-of-life materials, processing them into recycled commodities, and selling those commodities to industrial customers. Key revenue streams include: (1) Ferrous metal recycling: purchasing or coll...
Sims Earnings Call Summary
Earnings Call Date:Feb 16, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 25, 2026
Earnings Call Sentiment Positive
The call presented a largely positive operational and financial update driven by very strong nonferrous markets and an outstanding SLS performance (dramatic DDR4 price appreciation, repurposing growth and margin improvement). Management highlighted meaningful operational improvements in North America, disciplined cost control, a value‑accretive Tri‑Coastal acquisition and a continued focus on property value extraction. Offsetting items included ongoing weakness in ANZ ferrous markets driven by Chinese export dynamics, a GBP 30m receivable provision in the U.K., and elevated working capital requirements driven by higher nonferrous prices and derivative margin deposits. On balance the highlights—especially SLS and nonferrous strength plus NAM progress—outweighed the lowlights, though elevated working capital and regional ferrous pressure remain watch points.Positive Updates
SLS Strong Performance Driven by DDR4
SLS delivered an exceptionally strong half driven by DDR4 demand: DDR4 prices rose over 450% year-on-year, repurposed units increased ~18%, SLS EBIT margin improved by ~7.7 percentage points, and repurposing/revenue mix drove a large uplift in resale revenue (management highlighted revenue up nearly 70% in the segment).
Negative Updates
ANZ Ferrous Market Weakness
ANZ ferrous markets remained subdued due to elevated Chinese steel exports and weak global ferrous pricing; ferrous realization fell (ferrous price cited falling from just under A$570 to ~A$545) and ANZ results were negatively impacted despite strong nonferrous contribution. Management expects ANZ recovery depends on reduced Chinese exports or increased local EAF demand over multiple years.
Read all updates
Q2-2026 Updates
Positive
Negative
SLS Strong Performance Driven by DDR4
SLS delivered an exceptionally strong half driven by DDR4 demand: DDR4 prices rose over 450% year-on-year, repurposed units increased ~18%, SLS EBIT margin improved by ~7.7 percentage points, and repurposing/revenue mix drove a large uplift in resale revenue (management highlighted revenue up nearly 70% in the segment).
Read all positive updates
Company Guidance
Management guided that SLS momentum and DDR4 pricing remain very strong (DDR4 prices up >450% YoY), with the new 120,000 sq ft Ireland facility to open in early April, ramping to meaningful EBIT in June–July and targeting ~1 million repurposed units p.a. over the next two years (skewed to DDR4); they expect continued strength in nonferrous (LME copper +13.5% YoY, aluminium +9.8%) which now accounts for >40% of group revenue (vs ~35% prior), while metal sales revenue was flat despite volumes being down ~2%; North America benefits from tariff protection and a domestic shred premium (~US$50/t, ~85% of East Coast shred sold domestically), the Tri‑Coastal acquisition adds >350,000 t of presence at <4x post‑synergy EBITDA with combined annual EBITDA of ~US$25m and ROIC >20%, sustaining capital guidance remains AUD120–140m, debt facilities have been extended 12 months, an interim fully franked dividend of $0.14/share was declared, working capital has risen (c.+$200m from higher nonferrous prices plus $72m of derivative deposits), and management said costs were largely contained (total costs up ~4%; ~$16m of additional variable costs), while safety metrics remain at best‑in‑class historical lows.Sims Financial Statement Overview
Summary
Income Statement
45
Neutral
Balance Sheet
60
Neutral
Cash Flow
50
Neutral
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 7.63B | 7.49B | 7.20B | 8.08B | 9.28B | 5.93B |
| Gross Profit | 1.25B | 2.15B | 1.04B | 844.30M | 1.15B | 852.20M |
| EBITDA | 324.70M | 345.10M | 381.00M | 523.00M | 491.90M | 230.60M |
| Net Income | -58.30M | -19.00M | -57.80M | 181.10M | 599.30M | 229.40M |
Balance Sheet | ||||||
| Total Assets | 4.34B | 4.45B | 4.90B | 4.71B | 4.44B | 3.68B |
| Cash, Cash Equivalents and Short-Term Investments | 106.10M | 215.60M | 280.80M | 329.80M | 267.50M | 254.10M |
| Total Debt | 959.10M | 787.70M | 784.40M | 804.80M | 701.70M | 557.10M |
| Total Liabilities | 1.84B | 1.86B | 2.34B | 2.05B | 1.90B | 1.56B |
| Stockholders Equity | 2.50B | 2.59B | 2.56B | 2.66B | 2.54B | 2.12B |
Cash Flow | ||||||
| Free Cash Flow | -72.60M | 103.00M | -12.10M | 218.70M | 273.10M | 800.00K |
| Operating Cash Flow | 104.50M | 297.10M | 202.50M | 449.20M | 547.80M | 129.40M |
| Investing Cash Flow | -169.50M | -64.50M | -344.50M | -245.20M | -274.80M | -126.90M |
| Financing Cash Flow | -21.30M | -142.40M | -75.50M | -155.00M | -259.70M | 10.40M |
Sims Technical Analysis
Neutral
18.94
Price Trends
20.32
Negative
18.86
Positive
16.72
Positive
Market Momentum
-0.28
Positive
44.21
Neutral
18.58
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:SGM, the sentiment is Neutral. The current price of 18.94 is below the 20-day moving average (MA) of 19.47, below the 50-day MA of 20.32, and above the 200-day MA of 16.72, indicating a neutral trend. The MACD of -0.28 indicates Positive momentum. The RSI at 44.21 is Neutral, neither overbought nor oversold. The STOCH value of 18.58 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AU:SGM.
Sims Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | AU$226.27M | 7.02 | 24.98% | 7.62% | -0.03% | 23.78% | |
65 Neutral | AU$11.56B | 6.75 | 2.76% | 2.48% | -4.46% | -89.42% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
61 Neutral | AU$772.21M | 33.43 | 6.68% | 0.86% | -12.17% | -61.32% | |
59 Neutral | AU$2.91B | 11.40 | 12.63% | 3.66% | 0.40% | -53.09% | |
53 Neutral | AU$3.65B | -28.99 | 0.14% | 1.27% | 3.98% | 70.79% | |
52 Neutral | AU$466.27M | -6.44 | -7.08% | ― | -48.05% | -1394.34% |
* Basic Materials Sector Average
AU:SGM
Sims
18.94
4.55
31.64%
AU:CIA
Champion Iron
5.45
0.89
19.62%
AU:BSL
Bluescope Steel
26.38
6.22
30.86%
AU:MGX
Mount Gibson Iron Limited
0.40
0.07
19.70%
AU:BIS
Bisalloy Steel Group Ltd
4.71
1.72
57.53%
AU:VSL
Vulcan Steel Ltd.
5.27
-2.58
-32.87%
Sims Corporate Events
Sims Outlines Lifecycle Services Operations at 2026 Investor Day
Mar 25, 2026
Sims convened an Investor Day for its Sims Lifecycle Services division on 25 March 2026, providing a high-level presentation of the group’s current activities and operations. The event was framed as an information update to complement the co...
Sims lifts FY26 earnings outlook on strong non-ferrous and chip markets
Mar 17, 2026
Sims Limited, listed on the ASX and quoted on the U.S. OTC market, provides metal recycling and technology circularity services worldwide, underpinning its role in the circular economy. The company’s operations span 13 countries, where it co...
State Street Group Ceases to Be Substantial Holder in Sims Limited
Mar 5, 2026
State Street Corporation and several of its asset management subsidiaries have lodged a notice stating they have ceased to be substantial shareholders in Sims Limited as of March 3, 2026. The filing, made under section 671B of the Corporations Act...
Sims consolidates Houston footprint with Tri Coastal deal and Mayo Shell sale
Feb 9, 2026
Sims Limited has moved to streamline its presence in Houston, agreeing to acquire the assets of scrap processor Tri Coastal Trading for US$66.5 million while concurrently arranging the sale of its non-operating Mayo Shell property. The deal consol...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.