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Sims (SMSMY)
OTHER OTC:SMSMY
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Sims
(OTC:SMSMY)
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Rating:62Neutral
Price Target:
$13.50
▲(8.70% Upside)
Action:ReiteratedDate:02/17/26
The score is driven mainly by mixed fundamentals: stable leverage and returning revenue growth are offset by weak profitability and pressured cash flow. Technicals are notably supportive with a clear uptrend and positive momentum, while valuation is constrained by a negative P/E and modest yield. Earnings-call tone was positive on operational momentum and capital allocation, but tempered by ferrous-market weakness and working-capital/provisioning headwinds.
Positive Factors
Growing nonferrous mix
A rising share of revenue from nonferrous commodities reduces dependence on volatile ferrous cycles and benefits from favorable base-metal price trends. Structural shift toward higher-margin nonferrous sales should support revenue resilience and improve portfolio-wide margin mix over coming years.
Manageable leverage & equity cushion
Low leverage and a strong equity ratio provide financial flexibility for capex, bolt-on M&A and property recycling. This balance-sheet strength reduces refinancing risk, supports the planned sustaining capital program and underpins ability to absorb cyclical downturns without forced asset sales.
SLS scale-up and durable repurposing growth
Rapid SLS growth driven by DDR4 repurposing and a dedicated Ireland facility signals a durable new revenue stream and higher-value service mix. Scaling repurposing capacity institutionalizes a circular-economy business line with recurring service margins and sizeable unit throughput potential.
Negative Factors
Weak profitability and cash generation
Negative net margins and sharply reduced free cash flow highlight persistent earnings quality and cash-conversion problems. Over the medium term this constrains reinvestment, dividend flexibility and increases reliance on working capital or financing to fund growth initiatives and property recycling.
Elevated working-capital strain
Higher nonferrous prices and derivative margining materially increased inventory/receivable funding needs. Structural working-capital pressure reduces free cash flow, raises funding cost sensitivity and can depress reported cash generation during sustained high commodity-price regimes.
ANZ ferrous exposure & UK receivable risk
Geographic exposure to weak ANZ ferrous markets and significant UK receivable provisioning point to structural earnings volatility and credit risk. Recovery in ANZ depends on long-dated capacity shifts, while receivable losses can erode statutory profits and cash recovery over multiple reporting periods.
Sims (SMSMY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.54B
Dividend Yield1.08%
Average Volume (3M)81.00
Price to Earnings (P/E)―
Beta (1Y)1.23
Revenue Growth2.78%
EPS Growth72.91%
CountryUS
Employees3,887
SectorBasic Materials
Sector Strength58
IndustrySteel
Share Statistics
EPS (TTM)0.22
Shares Outstanding193,232,990
10 Day Avg. Volume0
30 Day Avg. Volume81
Financial Highlights & Ratios
PEG Ratio2.27
Price to Book (P/B)1.12
Price to Sales (P/S)0.39
P/FCF Ratio28.08
Enterprise Value/Market Cap1.77
Enterprise Value/Revenue0.60
Enterprise Value/Gross Profit3.65
Enterprise Value/Ebitda14.07
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.66
Revenue Forecast (FY)$5.59B
Sims Business Overview & Revenue Model
Company DescriptionSims 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, Investment in SA Recycling, Australia/New Zealand Metals, UK Metals, Global Trading, and Sims Lifecycle Services. It is involved in the collection, processing, and trading of iron and steel secondary raw materials; and other metal alloys and residues, principally aluminum, lead, copper, zinc, and nickel bearing materials. The company also engages in the provision of environmentally responsible solutions for the disposal of post-consumer electronic products, such as information technology assets recycled for commercial customers; and environmentally responsible recycling of negative value materials, including electrical and electronic equipment. In addition, it provides secondary processing and other services comprising recycling of municipal curbside materials, stevedoring, and other sources of service. Sims Limited was founded in 1917 and is headquartered in Mascot, Australia.
How the Company Makes MoneySims primarily makes money by purchasing scrap metal and other end-of-life materials, processing them into standardized recycled commodity products, and selling those commodities into downstream manufacturing markets. The largest revenue stream typically comes from ferrous scrap (e.g., shredded steel and other iron-bearing materials) sold to steel producers, while additional revenue is generated from non-ferrous metals (e.g., aluminum, copper, brass, stainless and mixed non-ferrous products) recovered through processing and separation and sold to smelters and metal manufacturers. Revenue and gross profit are influenced by commodity prices (scrap and finished recycled metal prices), the spread between purchase costs and selling prices, volumes sourced, and processing yields (how much saleable metal is recovered from inbound material). The company also generates revenue from its electronics and IT asset disposition activities by providing services such as collection logistics, secure data destruction, testing and refurbishment/resale of reusable devices (where applicable), and recycling of non-reusable equipment with downstream recovery of metals and other materials. Additional factors affecting earnings include demand from steel and metals manufacturing, regional trade flows and export market access, and operational efficiency at processing facilities. Specific significant partnerships: null.
Sims Earnings Call Summary
Earnings Call Date:Feb 16, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 25, 2026
Earnings Call Sentiment Positive
Overall the call conveyed a positive operational and strategic progress story: SLS delivered an exceptional half driven by DDR4 repurposing and strong nonferrous markets materially supporting group revenue and margins; NAM and SA Recycling showed disciplined margin improvement and asset-led growth (including the accretive Tri-Coastal acquisition). Management also demonstrated cost discipline, capital recycling focus and returned capital via an interim dividend. Key risks include ANZ ferrous weakness driven by Chinese exports, working capital pressure from rising nonferrous prices and some statutory volatility from hedging and provisioning, but these were presented as manageable within the group’s strategic actions.Q2-2026 Updates
Positive Updates
Strong SLS performance driven by DDR4 demand
SLS delivered an exceptionally strong first half driven by DDR4 price and demand dynamics: DDR4 memory prices rose over 450% year-on-year, repurposed units were up ~18%, SLS EBIT margin increased by 7.7 percentage points, and management expects continued strength with a new 120,000 sq ft Ireland facility (opening April) targeting ~1 million repurposed units p.a. over the next 2 years.
Nonferrous markets provided major revenue support
Nonferrous prices contributed materially to results: LME copper up ~13.5% YoY and aluminium +9.8% YoY. Nonferrous trading accounted for over 40% of group revenue (up from ~35% in the prior period), and blended nonferrous realized prices rose from ~A$4,100 to ~A$5,000.
Operational progress in North America (NAM)
NAM improved margin mix by prioritising unprocessed intake: unprocessed ferrous increased ~12 percentage points over two years, trading margin percentage up ~5 percentage points over two years, shredder utilisation up ~12 percentage points, and domestic shred sales on the East Coast grew to ~85% (from ~10% a few years ago), capturing a domestic shred premium (~A$50/t).
Tri-Coastal acquisition and Houston property strategy
Announced Tri-Coastal (TCT) acquisition expanding Houston presence by >350,000 tonnes, reducing operating costs through a service agreement, freeing sale of Houston land (estimated proceeds in excess of USD 100m), bought at under ~4x EBITDA post-synergies, with combined annual EBITDA expected ~USD 25m and an expected ROIC >20%.
Disciplined cost control and corporate actions
Group operating costs were kept relatively flat (rebased increase ~4% vs prior half) despite higher inflows and SLS volume growth. Central cost reductions include $10–12m pa saved by ceasing plasma-assisted gasification development; moved to global shared services; corporate office relocation executed; and debt facilities extended by 12 months to support balance-sheet flexibility.
SA Recycling resilience and bolt-on growth
SA Recycling maintained a consistent trading margin (~30%) over several years, accelerated hub-and-spoke roll-up since 2021 (76 yards acquired vs 52 in prior 10 years), supporting stable unprocessed inflows and nonferrous earnings and positioning the business to capture upside when ferrous cycles recover.
Capital allocation and shareholder return
Board declared an interim dividend of A$0.14 per share (fully franked). Sustaining capital guidance maintained at A$120–140m for FY26, and management continues disciplined property recycling and targeted capital spend (majority focused on North American metal recovery and ANZ Pinkenba redevelopment).
Safety, governance and strategic hires
Total recordable injury frequency rate maintained at best-in-class historical lows; climate data integration and governance progressed; SLS senior management relocated to Irvine; added a Chief Digital Officer to deepen hyperscaler integration and a property strategy lead to unlock asset value.
Negative Updates
ANZ ferrous market weakness and external headwinds
ANZ experienced subdued ferrous results due to elevated Chinese steel exports and weaker global ferrous pricing; ANZ exposed to export pressures and was impacted by a stronger AUD (from ~US$0.67 to ~US$0.71), which weighed on export parity and translation. Management expects ANZ recovery to depend on longer-term EAF capacity shifts (2027–2028).
Sales volumes and ferrous price pressure
Consolidated metal sales volumes were down ~2% in the half. Average realized ferrous prices fell (~5% reduction in NAM average realized ferrous prices period-on-period) producing an estimated ~A$13m negative impact to NAM underlying EBIT for the half.
Working capital and derivative margin pressure
Higher nonferrous prices increased working capital requirements (net assets include ~A$200m uplift in inventory/receivables) and generated a ~A$72m transfer to broker/deposit margins related to derivative trading activities; these margin deposits will unwind but temporarily reduced reported operating cash flow.
UK receivable provisioning related to Unimetals
Management updated potential credit loss on the residual UK metal receivable (Unimetals) by a further GBP 30m, reflecting continued recovery uncertainty and negatively impacting statutory results despite prior cash maximization from the UK exit.
Statutory impacts and mark-to-market volatility
Statutory results were affected by restructuring charges and non-cash hedge mark-to-market adjustments associated with the run-up in copper and aluminium prices at period end, introducing earnings volatility in reported results.
Operational outages and input cost pressures
ANZ experienced shredder downtime at St Mary's in Q1 that reduced output (mostly recovered in Q2), and operations faced elevated consumable input costs (waste disposal, electricity) that partially offset margin gains.
SLS revenue timing and contractual opacity
SLS benefits from DDR4 pricing with a typical 1–2 month lag and material revenue-share arrangements that limit full gross revenue flow-through; management signalled commercial sensitivity around contract details, which constrains external visibility on exact resale vs service economics and future margin sensitivity if pricing shifts.
Company Guidance
Company guidance highlighted SLS momentum with further SLS guidance to be given in March, Ireland expansion (120,000 sq ft) to open early April with meaningful EBIT by June/July and a target of ~1 million repurposed units p.a. over the next 2 years; group sustaining capital expected A$120–140m for FY, interim dividend A$0.14/sh (payable March, fully franked), debt facilities extended 12 months and net assets ~A$2.5bn; Tri‑Coastal adds >350,000 t optionality, bought at <4x post‑synergy EBITDA, combined annual EBITDA ~US$25m and ROIC >20%, and frees >US$100m of Houston land value; markets commentary: LME copper +13.5% YoY, aluminium +9.8% YoY, DDR4 prices +450% YoY, nonferrous now >40% of group revenue (from ~35%), repurposed units +~18%, metal sales revenue flat with volumes -2%, ferrous realized ~A$545/t (from ~A$570) while nonferrous rose ~A$4,100→~A$5,000/t; working capital rose ~A$200m (including A$72m broker deposits), UK receivable provision increased GBP30m, safety TRIFR at historical lows, and management expects continued benefit from U.S. tariffs and a domestic shred premium of ~$50/t.Sims Financial Statement Overview
Summary
Revenue growth is positive (10.87%), and leverage is manageable (debt-to-equity 0.30; equity ratio 58.19%). However, profitability remains weak (net margin -0.25%, EBIT margin 1.20%, ROE -0.73%) and cash generation is pressured (free cash flow growth -57.7%; operating cash flow to net income 0.31).Income Statement
Sims has shown a mixed performance in its income statement. The revenue growth rate of 10.87% in the latest period is a positive sign, indicating recovery from previous declines. However, the company is struggling with profitability, as evidenced by a negative net profit margin of -0.25% and an EBIT margin of 1.20%. The gross profit margin is relatively healthy at 28.67%, but the negative net income highlights ongoing challenges in cost management and operational efficiency.55
Neutral
Balance Sheet
The balance sheet reflects moderate financial stability. The debt-to-equity ratio of 0.30 indicates a manageable level of leverage, which is a positive aspect. However, the return on equity is negative at -0.73%, suggesting inefficiencies in generating returns for shareholders. The equity ratio stands at 58.19%, showing a solid equity base relative to total assets, which provides some financial cushion.60
Neutral
Cash Flow
Cash flow analysis reveals some concerns, particularly with a significant decline in free cash flow growth at -57.7%. The operating cash flow to net income ratio of 0.31 indicates that cash generation from operations is not fully covering net losses. The free cash flow to net income ratio is 0.35, which shows some ability to generate cash relative to net income, but overall cash flow management needs improvement.50
Neutral
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 7.56B | 7.49B | 7.20B | 8.08B | 9.28B | 5.93B |
| Gross Profit | 1.23B | 2.15B | 1.04B | 844.30M | 1.15B | 852.20M |
| EBITDA | 319.94M | 345.10M | 381.00M | 523.00M | 491.90M | 230.60M |
| Net Income | -57.75M | -19.00M | -57.80M | 181.10M | 599.30M | 229.40M |
Balance Sheet | ||||||
| Total Assets | 4.33B | 4.45B | 4.90B | 4.71B | 4.44B | 3.68B |
| Cash, Cash Equivalents and Short-Term Investments | 105.99M | 215.60M | 280.80M | 329.80M | 267.50M | 254.10M |
| Total Debt | 958.15M | 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 | -74.23M | 103.00M | -12.10M | 218.70M | 273.10M | 800.00K |
| Operating Cash Flow | 101.65M | 297.10M | 202.50M | 449.20M | 547.80M | 129.40M |
| Investing Cash Flow | -168.34M | -64.50M | -344.50M | -245.20M | -274.80M | -126.90M |
| Financing Cash Flow | -18.28M | -142.40M | -75.50M | -155.00M | -259.70M | 10.40M |
Sims Technical Analysis
Neutral
12.42
Price Trends
13.96
Negative
12.37
Positive
10.98
Positive
Market Momentum
-0.33
Positive
34.51
Neutral
5.15
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SMSMY, the sentiment is Neutral. The current price of 12.42 is below the 20-day moving average (MA) of 14.56, below the 50-day MA of 13.96, and above the 200-day MA of 10.98, indicating a neutral trend. The MACD of -0.33 indicates Positive momentum. The RSI at 34.51 is Neutral, neither overbought nor oversold. The STOCH value of 5.15 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SMSMY.
Sims Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $4.90B | 61.64 | 6.07% | ― | -16.81% | -67.68% | |
67 Neutral | $1.64B | 22.60 | 11.57% | 1.78% | -0.75% | -13.51% | |
62 Neutral | $2.54B | -30.00 | -2.29% | 1.08% | 2.78% | 72.91% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
59 Neutral | $607.59M | -599.17 | -1.18% | ― | -3.42% | -134.99% | |
45 Neutral | $1.52B | -19.29 | -13.62% | ― | -5.79% | -5.30% |
* Basic Materials Sector Average
SMSMY
Sims
13.14
3.50
36.29%
SIM
Grupo Simec SA De CV
30.15
3.84
14.62%
SID
Companhia Siderúrgica Nacional
1.17
-0.64
-35.36%
MTUS
Metallus
14.56
0.70
5.05%
WS
Worthington Steel, Inc.
32.28
6.61
25.75%
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.