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Reliance Steel & Aluminum Company (RS)
NYSE:RS
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Reliance Steel
(NYSE:RS)
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Rating:70Outperform
Price Target:
$360.00
▲(11.56% Upside)
Action:ReiteratedDate:02/20/26
RS scores well on financial quality—especially a conservative balance sheet—and a generally positive earnings outlook with guided improvement and continued capital returns. Offsetting this, recent profitability and cash flow have cooled versus peak-cycle levels, technical signals are mixed/neutral, and valuation (P/E ~24) looks only average given cyclicality.
Positive Factors
Scale & Market Share
Record shipments and rising U.S. market share demonstrate durable scale advantages. A 6.4M ton footprint and rising share enhance purchasing leverage, distribution efficiency and pricing resilience, which support sustained volumes and margin stability across steel cycles.
Conservative Balance Sheet
Low-to-moderate leverage and strong equity provide financial flexibility to fund growth, M&A, and buybacks while weathering downturns. Net debt/EBITDA below 1 reduces refinancing risk and preserves optionality for strategic investments over multiple quarters.
Diversified Business Model
A broad mix of end markets and value-added services (cutting, shearing, welding) creates sticky customer relationships and multiple revenue streams. Diversification reduces dependence on any one sector, smoothing demand swings and aiding long-term revenue resilience.
Negative Factors
Weakened Cash Generation
Material decline in operating cash flow and FCF reduces the internal funding available for capex, acquisitions and shareholder returns. Lower cash conversion and near‑unity coverage (~0.98) leave less cushion against cyclical stress and increase reliance on balance sheet flexibility.
Compressed Profitability
Earnings and margin compression from 2021–2022 peaks reflect the sector's cyclicality and reduced operating leverage. Lower profitability implies weaker returns on capital over the medium term and greater sensitivity of earnings to commodity price and end-market swings.
Tariff/LIFO-Driven Earnings Volatility
Tariff-driven aluminum cost increases and outsized LIFO expense (~$114M) create recurring reported-earnings volatility relative to underlying FIFO performance. This accounting mismatch can obscure true operating trends and complicate long-term planning and investor assessment.
Reliance Steel (RS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$17.59B
Dividend Yield1.63%
Average Volume (3M)364.33K
Price to Earnings (P/E)24.1
Beta (1Y)0.82
Revenue Growth-0.88%
EPS Growth-25.15%
CountryUS
Employees15,900
SectorBasic Materials
Sector Strength58
IndustrySteel
Share Statistics
EPS (TTM)2.40
Shares Outstanding52,286,964
10 Day Avg. Volume423,930
30 Day Avg. Volume364,333
Financial Highlights & Ratios
PEG Ratio-1.98
Price to Book (P/B)2.12
Price to Sales (P/S)1.06
P/FCF Ratio30.21
Enterprise Value/Market Cap1.04
Enterprise Value/Revenue1.28
Enterprise Value/Gross Profit4.71
Enterprise Value/Ebitda14.02
Forecast
1Y Price Target
$326.60Price Target Upside1.21% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)17.7
Revenue Forecast (FY)$14.94B
Reliance Steel Business Overview & Revenue Model
Company DescriptionReliance Steel & Aluminum Co. operates as a diversified metal solutions provider and the metals service center company in the United States, Canada, and internationally. The company distributes a line of approximately 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and specialty steel products; and provides metals processing services to general manufacturing, non-residential construction, transportation, aerospace, energy, electronics and semiconductor fabrication, and heavy industries. It also distributes non-ferrous metals products and tubular building products; and manufactures specialty extruded metals, fabricated parts, and welded components. As of December 31, 2021, the company operated a network of approximately 315 locations in 40 states in the United States and 13 in other countries. It sells its products directly to original equipment manufacturers, which primarily include small machine shops and fabricators. The company was founded in 1939 and is headquartered in Los Angeles, California.
How the Company Makes MoneyReliance Steel generates revenue primarily through the sale of metal products and related processing services. The company's revenue model is based on a combination of direct sales and value-added services, such as cutting, shearing, and welding, which enhance the utility of the raw materials for clients. Key revenue streams include sales from its extensive inventory of metals and alloys, as well as fees from processing services. Reliance Steel benefits from strategic partnerships with suppliers and manufacturers, allowing it to maintain a competitive edge in pricing and product availability. Additionally, the company capitalizes on market demand in various sectors, which can fluctuate based on economic conditions, thereby influencing its overall earnings.
Reliance Steel Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 22, 2026
Earnings Call Sentiment Positive
The call highlighted strong operational execution: record shipments, market share gains, solid FIFO profitability improvement, robust cash flow generation, and a constructive near-term outlook with guidance implying year-over-year EPS growth. Principal weaknesses centered on tariff-driven aluminum cost increases and elevated LIFO expense that compressed reported margins and resulted in a year-over-year decline in GAAP diluted EPS, alongside pockets of demand weakness in commercial aerospace and semiconductors. Management characterized many headwinds as temporary or addressable in 2026 and pointed to continued financial flexibility to pursue organic investments, M&A and capital returns.Q4-2025 Updates
Positive Updates
Record Shipment Volume and Market Share Gains
Tons shipped increased 6.2% in 2025 to a record 6.4 million tons; U.S. market share rose to ~17% from 15% in 2024 (≈ +2 percentage points); tolling tons increased 1.2% to 7.4 million.
Strong FIFO Profitability Improvement
FIFO gross profit margin increased by 90 basis points year-over-year in 2025; 2025 non-GAAP FIFO pretax income increased by $80 million versus 2024; excluding LIFO adjustments, 2025 non-GAAP FIFO earnings per diluted share rose 13.5% year-over-year.
Robust Q4 Financial Performance
Fourth quarter non-GAAP EPS of $2.40, up 8% year-over-year; Q4 non-GAAP pretax income rose ~28% year-over-year, driven by roughly +6% volumes and +6% selling prices versus prior year quarter.
Strong Cash Flow and Capital Returns
Generated $831 million in operating cash flow in 2025; returned $849 million to stockholders through dividends and share repurchases; repurchased $200 million of stock in Q4 at an average price of ~$279 and reduced shares outstanding by ~4% in 2025; ~$763 million remaining under repurchase authorization.
Conservative and Flexible Capital Plan
Announced 2026 capital expenditure budget of $275 million (total 2026 expected with carryover $300M–$325M), with ~half directed toward growth; management emphasizes ability to increase CapEx opportunistically for profitable customer opportunities.
Positive 2026 Near-Term Outlook
Guidance for Q1 2026: tons sold up 5%–7% vs Q4 2025 (flat vs Q1 2025), average selling price per ton expected to improve 3%–5% vs Q4 2025; forecasted Q1 2026 non-GAAP EPS $4.50–$4.70 (≈ +19%–25% YoY), inclusive of estimated Q1 LIFO expense of $25M ($0.36/sh).
Favorable Leverage and Balance Sheet
Total debt $1.4 billion at year-end 2025 with net debt-to-EBITDA < 1, providing liquidity to support M&A, buybacks, dividends and capital programs.
Operational Execution and Safety
Continued focus on safety with improved TRIR in 2025; operating leverage realized as same-store SG&A per ton fell nearly 1% for the full year despite inflationary wage and delivery cost pressures.
Negative Updates
Tariff-Driven Aluminum Cost Headwinds and Large LIFO Impact
Significant tariff-related aluminum cost increases were difficult to fully pass through due to plentiful supply and soft end-market demand; full-year LIFO expense was $114 million (above the $100M estimate), driving 2025 non-GAAP gross profit margin to 28.8% (just below the stated sustainable 29%–31% annual range).
Reported EPS Decline (GAAP/LIFO Impact)
Full-year 2025 diluted earnings per share declined 10.2% versus 2024; LIFO and year-end tax true-ups produced a net unfavorable impact of $0.25 per share and Q4 LIFO expense of $39M (vs. $25M guidance assumption) represented $0.56 per share for the quarter.
End-Market Weaknesses: Commercial Aerospace and Semiconductor
Commercial aerospace demand remained subdued due to elevated supply chain inventories; semiconductor market under pressure from excess inventory—management estimated aerospace and semiconductor combined reduce consolidated margins by ~50+ basis points; recovery expected later in 2026.
Q4 Sequential Volume Decline
Fourth quarter tons sold declined 5.4% sequentially from Q3 2025 (though up 5.8% YoY), signaling some seasonality and near-term variability in demand.
Inflationary SG&A Pressures
Same-store non-GAAP SG&A expenses increased 6.7% in Q4 and 4.4% for the full year versus 2024, driven by wage inflation, higher variable warehousing/delivery costs and increased incentive compensation; Q4 SG&A per ton was up ~1.2% quarter-over-quarter.
Aluminum Disproportionately Impacting LIFO
Aluminum represented ~15% of sales but accounted for over half of the LIFO expense in 2025 due to tariff-induced cost increases, creating a unique mismatch between FIFO performance and LIFO accounting impacts.
Company Guidance
Management guided Q1 2026 tons sold up 5%–7% versus Q4 2025 (roughly flat vs Q1 2025) and average selling price per ton up 3%–5% versus Q4, expecting a modest sequential improvement in FIFO gross profit margin and Q1 non‑GAAP EPS of $4.50–$4.70 (≈19%–25% YoY), inclusive of quarterly LIFO expense of $25M (≈$0.36/share); full‑year 2026 LIFO is estimated at $100M. They set 2026 CapEx at $275M (total including carryover $300M–$325M, with ~50% toward growth), reiterated an annual gross‑profit margin target range of 29%–31% (2025 non‑GAAP margin was 28.8% with $114M LIFO expense), and highlighted strong liquidity and capital returns after generating $831M of operating cash flow in 2025 (Q4 $276M), returning $849M to shareholders in 2025, repurchasing $200M in Q4 at ≈$279/share (shares down ~4% in 2025) with ~$763M remaining buyback capacity, and carrying $1.4B total debt with net debt/EBITDA <1.0.Reliance Steel Financial Statement Overview
Summary
Fundamentals are solid but cooling: revenue is stable and the company remains profitable with healthy gross margins, while earnings and margins have compressed from 2021–2022 peaks. The balance sheet is a clear strength with low-to-moderate leverage and strong flexibility, but cash flow has weakened meaningfully in 2025 versus prior years despite remaining positive.Income Statement
Revenue has been relatively stable recently (2025 up ~2.7% after modest declines in 2023–2024), but profitability has clearly cooled from the 2021–2022 peak. Net income fell from about $1.84B (2022) to $739M (2025) and margins compressed (net margin ~10–11% in 2021–2022 vs. ~5.2% in 2025; operating profitability similarly down). Strengths are still-solid gross profitability (mid-to-high 20% gross margin) and positive earnings power, while the key weakness is the down-cycle impact on operating leverage and earnings momentum.74
Positive
Balance Sheet
The balance sheet looks conservatively positioned with low-to-moderate leverage: debt-to-equity is ~0.24 in 2025 (generally ~0.18–0.36 over 2020–2025), and equity has remained large and stable (~$7.17B in 2025). Returns on equity have normalized from very strong levels in 2021–2022 to ~10% in 2025, reflecting weaker profitability rather than balance-sheet stress. Overall strength is financial flexibility and manageable leverage; the main drawback is declining return generation versus the prior cycle highs.82
Very Positive
Cash Flow
Cash generation remains positive, but it has weakened notably: operating cash flow declined to ~$831M in 2025 from ~$1.43B in 2024 and ~$2.12B in 2022, and free cash flow fell to ~$503M in 2025 with a sharp negative growth rate (about -24% in 2025). Cash conversion is decent but not exceptional—free cash flow is roughly 60% of net income in 2025 (vs. ~70–84% in 2021–2024/2022), and operating cash flow is just under net income in 2025 (coverage ~0.98), indicating less cushion than in stronger years. Strengths are sustained positive free cash flow; weaknesses are the recent downtrend and reduced cash coverage versus prior years.68
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 14.29B | 13.84B | 14.81B | 17.02B | 14.09B |
| Gross Profit | 3.83B | 3.84B | 4.30B | 5.01B | 4.26B |
| EBITDA | 1.30B | 1.45B | 2.03B | 2.73B | 2.26B |
| Net Income | 739.40M | 875.20M | 1.34B | 1.84B | 1.41B |
Balance Sheet | |||||
| Total Assets | 10.37B | 10.02B | 10.48B | 10.33B | 9.54B |
| Cash, Cash Equivalents and Short-Term Investments | 216.60M | 318.10M | 1.08B | 1.17B | 300.50M |
| Total Debt | 1.99B | 1.42B | 1.38B | 1.87B | 1.87B |
| Total Liabilities | 3.19B | 2.79B | 2.75B | 3.23B | 3.44B |
| Stockholders Equity | 7.17B | 7.22B | 7.72B | 7.09B | 6.09B |
Cash Flow | |||||
| Free Cash Flow | 502.50M | 999.20M | 1.20B | 1.78B | 562.80M |
| Operating Cash Flow | 831.40M | 1.43B | 1.67B | 2.12B | 799.40M |
| Investing Cash Flow | -321.80M | -803.70M | -483.90M | -348.50M | -652.30M |
| Financing Cash Flow | -620.20M | -1.38B | -1.28B | -892.60M | -528.90M |
Reliance Steel Technical Analysis
Positive
322.70
Price Trends
317.33
Positive
296.83
Positive
298.15
Positive
Market Momentum
3.56
Positive
43.54
Neutral
16.44
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RS, the sentiment is Positive. The current price of 322.7 is below the 20-day moving average (MA) of 338.15, above the 50-day MA of 317.33, and above the 200-day MA of 298.15, indicating a neutral trend. The MACD of 3.56 indicates Positive momentum. The RSI at 43.54 is Neutral, neither overbought nor oversold. The STOCH value of 16.44 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RS.
Reliance Steel Risk Analysis
Reliance Steel disclosed 25 risk factors in its most recent earnings report. Reliance Steel reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Reliance Steel Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $17.59B | 24.07 | 10.28% | 1.63% | -0.88% | -25.15% | |
70 Outperform | $28.15B | 24.12 | 13.25% | 1.11% | -1.49% | -31.82% | |
65 Neutral | $48.92B | 15.72 | 6.12% | 1.03% | -4.51% | ― | |
65 Neutral | $42.23B | 24.54 | 8.44% | 1.34% | 1.66% | -31.25% | |
65 Neutral | $8.57B | 14.93 | 3.49% | 7.02% | -16.69% | 585.38% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
52 Neutral | $19.59B | 59.18 | 0.78% | 3.22% | -8.97% | -67.03% |
* Basic Materials Sector Average
RS
Reliance Steel
322.70
31.64
10.87%
MT
ArcelorMittal
66.83
39.34
143.14%
NUE
Nucor
178.85
44.50
33.12%
PKX
POSCO
67.37
20.01
42.25%
STLD
Steel Dynamics
196.01
64.05
48.54%
TX
Ternium SA
43.33
16.56
61.86%
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.