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Russel Metals Inc (TSE:RUS)
TSX:RUS
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Russel Metals
(TSX:RUS)71Outperform
Russel Metals (RUS) vs. S&P 500 (SPY)
Market Cap
$2.28B
Dividend Yield4.3%
Average Volume (3M)193.36K
Price to Earnings (P/E)14.6
Beta (1Y)0.95
Revenue Growth-5.41%
EPS Growth-37.08%
CountryCA
Employees3,501
SectorIndustrials
Sector Strength66
IndustryIndustrial Equipment Distributors
Share Statistics
EPS (TTM)2.72
Shares Outstanding57,100,000
10 Day Avg. Volume183,914
30 Day Avg. Volume193,362
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.54
Price to Cash Flow (P/CF)5.30
P/FCF Ratio5.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$53.00Price Target Upside32.94% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Russel Metals Business Overview & Revenue Model
Company DescriptionRussel Metals Inc. is one of North America's leading metal distribution companies headquartered in Mississauga, Ontario, Canada. It operates in three main segments: metals service centers, energy products, and steel distributors. The company's core products and services include the distribution and processing of metals such as carbon steel, stainless steel, and aluminum products to a wide range of industries including construction, energy, and manufacturing.
How the Company Makes MoneyRussel Metals generates revenue primarily through its three business segments. The metals service centers segment, the largest contributor to revenue, involves the processing and distribution of metal products, where the company earns money by purchasing bulk metal products, processing them to customer specifications, and selling them at a markup. The energy products segment supplies specialized pipe, valve, and fitting products to the oil and gas industry, earning revenue through sales contracts with energy companies. The steel distributors segment involves the wholesale distribution of steel products, where the company makes money by purchasing steel from mills and selling it to various end-users. Key factors contributing to Russel Metals' earnings include its strategic partnerships with steel mills and energy companies, its vast distribution network, and its ability to provide value-added processing services to its customers.
Russel Metals Financial Statement Overview
Summary
Russel Metals has a strong balance sheet with a high equity ratio and improved leverage. However, income statement challenges include declining revenue and profitability. Cash flow remains robust, indicating effective management despite a dip in net income.Income Statement
Russel Metals experienced fluctuating revenues over the past years, with a notable decline in 2024. The gross profit margin in 2024 was 20.88%, a decrease from previous years, reflecting reduced operational efficiency. The absence of EBIT in 2024 indicates challenges in maintaining profitability. The EBITDA margin for 2024 was 7.39%, showing some resilience despite revenue decline, but significantly lower than previous years' margins.68
Positive
Balance Sheet
Russel Metals maintains a strong equity position, with an equity ratio of 70.66% in 2024, indicating a stable financial structure. The debt-to-equity ratio improved to 0.12 in 2024, reflecting lower financial leverage. Return on equity (ROE) for 2024 was 9.71%, a decrease from previous years, suggesting reduced profitability for shareholders.75
Positive
Cash Flow
Cash flow from operations was strong at $343.9 million in 2024, though down from 2023. Free cash flow was $253.7 million in 2024, indicating solid cash management. The free cash flow to net income ratio was 1.58, showing that the company generates significant cash beyond net income, albeit decreased compared to previous years.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.26B | 4.51B | 5.07B | 4.21B | 2.69B | Gross Profit |
| 889.90M | 956.50M | 1.13B | 1.21B | 518.70M | EBIT |
| 0.00 | 560.20M | 514.10M | 608.40M | 91.30M | EBITDA |
| 314.80M | 428.20M | 580.40M | 657.90M | 125.20M | Net Income Common Stockholders |
| 161.00M | 266.70M | 371.90M | 432.20M | 24.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 45.60M | 629.20M | 363.00M | 133.10M | 26.30M | Total Assets |
| 2.35B | 2.57B | 2.51B | 2.31B | 1.60B | Total Debt |
| 196.80M | 422.50M | 422.90M | 404.30M | 399.40M | Net Debt |
| 151.20M | -206.70M | 59.90M | 271.20M | 373.10M | Total Liabilities |
| 688.30M | 930.20M | 947.60M | 1.07B | 731.60M | Stockholders Equity |
| 1.66B | 1.64B | 1.56B | 1.25B | 864.70M |
| Cash Flow | Free Cash Flow | |||
| 253.70M | 389.00M | 318.40M | 275.70M | 346.10M | Operating Cash Flow |
| 343.90M | 461.70M | 359.90M | 304.50M | 371.00M | Investing Cash Flow |
| -417.70M | -5.30M | -6.50M | -107.20M | -27.30M | Financing Cash Flow |
| -537.90M | -184.90M | -139.10M | -93.50M | -327.10M |
Russel Metals Technical Analysis
Negative
39.87
Price Trends
41.05
Negative
41.47
Negative
39.31
Positive
Market Momentum
-0.19
Positive
39.77
Neutral
18.21
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:RUS, the sentiment is Negative. The current price of 39.87 is below the 20-day moving average (MA) of 40.99, below the 50-day MA of 41.05, and above the 200-day MA of 39.31, indicating a neutral trend. The MACD of -0.19 indicates Positive momentum. The RSI at 39.77 is Neutral, neither overbought nor oversold. The STOCH value of 18.21 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:RUS.
Russel Metals Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | C$32.33B | 10.56 | 10.56% | 3.90% | 3.97% | -22.22% | |
71 Outperform | $2.28B | 14.58 | 9.71% | 4.30% | -5.41% | -37.08% | |
71 Outperform | $92.01B | 20.92 | 21.13% | 2.51% | 1.30% | -18.15% | |
63 Neutral | C$437.04M | 8.22 | 10.25% | 7.12% | -3.67% | -39.42% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
61 Neutral | $14.97B | ― | 0.02% | ― | -24.38% | 99.06% | |
59 Neutral | C$1.38B | ― | -3.46% | ― | 20.56% | 94.32% |
* Industrials Sector Average
Performance Comparison
TSE:RUS
Russel Metals
39.87
-1.06
-2.58%
TSE:CVE
Cenovus Energy
17.73
-5.32
-23.06%
TSE:FM
First Quantum Minerals
16.89
2.98
21.42%
TSE:CNR
Canadian National Railway
141.12
-31.47
-18.23%
TSE:WJX
Wajax Corporation
17.30
-12.56
-42.06%
TSE:NFI
NFI Group Inc
11.16
-0.15
-1.33%
Russel Metals Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -2.98% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong financial performance with strategic growth investments and significant returns to shareholders. However, some challenges remain, such as revenue declines due to seasonality, market uncertainties related to tariffs, and integration costs from recent acquisitions. Despite these challenges, the company's achievements in cash flow, investments, and debt reduction indicate a positive outlook.Highlights
Strong Cash Flow Generation
Russel Metals generated $344 million of cash flow from operations in 2024, including $103 million from working capital, even amidst steel price volatility and economic uncertainty.
Record Investments and Capital Growth
Russel Metals made significant investments with $90 million in CapEx and over $300 million in acquisitions, marking the largest year for investing activities in the company's history.
Return on Invested Capital
The company achieved a return on invested capital of 15% in 2024, averaging 24% over the past three years, which is above their 15% target.
Significant Capital Return to Shareholders
Russel Metals returned $229 million to shareholders in 2024 through share buybacks and dividends, marking the largest capital return in the company's history.
Debt Reduction and Strong Balance Sheet
The company eliminated all long-term debt and ended the year with a net cash position of $32 million and $580 million of liquidity.
Lowlights
Revenue Decline in Q4
Revenues were down by 5% in Q4 compared to Q3 due to seasonality, and EBITDA decreased from Q3 levels.
Impact of Tariffs and Market Uncertainty
The potential U.S. tariffs and retaliatory tariffs present uncertainties that could affect steel prices and the business activities of some customers.
Nonrecurring Costs from Acquisitions
The Samuel integration incurred $1 million in nonrecurring costs in Q4, with further integration expected to complete in 2025.
Seasonal Dynamics and Market Volatility
There was a cautious buying activity amidst market volatility, impacting the steel distributors' segment negatively.
Company Guidance
In the Russel Metals 2024 Year End and Fourth Quarter Results Call, several key metrics and strategic initiatives were discussed. The company reported generating $344 million in cash flow from operations, with $103 million coming from working capital. Capital investments in 2024 totaled $90 million in CapEx, while the company completed acquisitions worth over $300 million, marking the largest year for investing activities in its history. This growth was reflected in their capital base, which increased from $1.3 billion at the end of 2023 to $1.6 billion by the end of 2024. The return on invested capital was reported at 15% for 2024, with a three-year average of 24%. The Service Center segment contributed 67% of revenues, and the U.S. platform accounted for 39%, expected to grow further. In terms of shareholder returns, $131 million was returned through share buybacks and $98 million via dividends, totaling $229 million. The company also achieved a net cash position of $32 million with $580 million in liquidity, having eliminated all long-term debt. Looking ahead to 2025, Russel Metals anticipates continued growth in their U.S. operations and specialty metals, while maintaining flexibility in adapting to market conditions such as potential U.S. tariffs.Russel Metals Corporate Events
M&A TransactionsStock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Russel Metals Reports 2024 Financials and Strategic Initiatives
Neutral
Feb 12, 2025
Russel Metals Inc. reported its financial results for the year ending December 31, 2024, indicating a revenue of $4.3 billion and an EBITDA of $299 million. The company undertook significant strategic actions, including two acquisitions, modernization projects, and value-added equipment enhancements. It also maintained a strong capital structure with liquidity of $580 million, despite a decrease in annual earnings per share from $4.33 to $2.73, highlighting its continued focus on growth and shareholder returns through share repurchases and dividends.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.