Worthington Steel, Inc. (WS) AI Stock Analysis

• Market Cap: $2.23B
• Dividend Yield: 1.78%
• Average Volume (3M): 275.02K
• Price to Earnings (P/E): 17.8
• Beta (1Y): 1.61
• Revenue Growth: -0.75%
• EPS Growth: -13.51%
• Country: US
• Employees: 5,000
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Steel
• EPS (TTM): 0.38
• Shares Outstanding: 50,805,634
• 10 Day Avg. Volume: 239,109
• 30 Day Avg. Volume: 275,020
• PEG Ratio: -0.39
• Price to Book (P/B): 1.15
• Price to Sales (P/S): 0.40
• P/FCF Ratio: 12.34
• Enterprise Value/Market Cap: 1.09
• Enterprise Value/Revenue: 0.74
• Enterprise Value/Gross Profit: 5.83
• Enterprise Value/Ebitda: 9.59
• 1Y Price Target: $47.00
• Price Target Upside: 6.65% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 2.47
• Revenue Forecast (FY): $3.64B

• Rating: 77 Outperform
• Price Target: $51.00 ▲(15.72% Upside)

The score is driven primarily by strong underlying financial health (low leverage, solid ROE, and robust cash flow) and constructive fundamentals from the latest earnings call (share gains and improving profitability). Technicals remain supportive but look stretched on RSI, while valuation is reasonable rather than compelling and the Kloeckner deal adds leverage and integration risk.

Positive Factors

Strong balance sheet and low leverage

A low debt-to-equity ratio (0.22) and solid ROE (11.57%) give the company durable financial flexibility to fund capex, weather cyclical steel demand, and pursue strategic deals or shareholder returns without immediate refinancing pressure. This supports multi‑quarter resilience and investment capacity.

Strong cash generation and free cash flow growth

Sustained operating cash conversion (OCF/net income 1.61) and large FCF growth (42.7% TTM) indicate high cash conversion from operations. That cash generation underpins capital allocation, deleveraging, and funding for transformation initiatives, making results durable across several quarters.

Market share gains, especially in automotive

A 26% rise in direct automotive shipments and new OEM wins reflect durable commercial momentum in higher‑value, long‑cycle accounts. Gaining share in automotive can raise average selling prices and mix, making revenue and margin improvements more sustainable than short‑term cyclical pickup.

Negative Factors

Kloeckner acquisition raises near‑term leverage

Planned financing that increases leverage to ~4x materially reduces financial flexibility and raises refinancing and covenant risk during integration. Higher interest and deleveraging needs could constrain capital allocation and amplify exposure to cyclical downturns over the next several quarters.

Modest profitability margins

Low single‑digit net margins and sub‑10% EBITDA margins limit the company's buffer against raw material swings and demand declines. Structural margin compression would quickly hit free cash flow and make deleveraging or investment harder during cyclical troughs over a medium horizon.

Operational headwinds: toll volume decline and higher SG&A

Facility closure and falling toll volumes reduce recurring service revenue and utilization. Concurrently higher SG&A tied to strategic projects raises fixed cost base. Together these trends can depress margins and slow profitability recovery, stressing operations through multiple quarters.

Worthington Steel, Inc. Business Overview & Revenue Model

Company Description

Worthington Steel, Inc. operates as a steel processor in North America. It offers carbon flat-rolled steel and tailor welded blanks, as well as electrical steel laminations; and aluminum tailor welded blanks. The company serves various end-markets, including automotive, heavy truck, agriculture, construction, and energy. Worthington Steel, Inc. was incorporated in 2023 and is based in Columbus, Ohio.

How the Company Makes Money

Worthington Steel generates revenue through multiple streams, predominantly by selling steel products to various industries, including construction and automotive. The company earns money through direct sales of its core products, such as flat-rolled steel and custom-fabricated steel components. Additionally, WS engages in value-added services, such as processing and fabrication, which command higher margins. Strategic partnerships with major manufacturers and suppliers enhance its distribution capabilities and market reach, thereby contributing significantly to its earnings. Furthermore, the company's focus on sustainability and innovation allows it to tap into niche markets, driving additional revenue growth.

Worthington Steel, Inc. Financial Statement Overview

Summary

Strong balance sheet with low leverage (debt-to-equity 0.22) and healthy ROE (11.57%), supported by solid cash generation (operating cash flow to net income 1.61) and strong free cash flow growth (42.73%). Profitability is stable but not exceptional, with modest net margin (3.82%) and moderate EBITDA margin (7.76%).

Income Statement

Worthington Steel, Inc. shows a solid performance in its income statement with a consistent revenue growth rate of 4.24% in the TTM period, indicating a positive trajectory. The gross profit margin of 12.76% and net profit margin of 3.82% reflect stable profitability, although there is room for improvement. The EBIT and EBITDA margins are moderate at 5.45% and 7.76%, respectively, suggesting efficient operations but with potential for enhanced cost management.

Balance Sheet

The balance sheet of Worthington Steel, Inc. is strong, with a low debt-to-equity ratio of 0.22, indicating prudent financial leverage. The return on equity (ROE) is healthy at 11.57%, showcasing effective use of shareholder funds. The equity ratio stands at 51.96%, reflecting a solid capital structure with a significant portion of assets financed by equity.

Cash Flow

Cash flow analysis reveals a robust free cash flow growth rate of 42.73% in the TTM period, highlighting strong cash generation capabilities. The operating cash flow to net income ratio of 1.61 indicates efficient cash conversion, while the free cash flow to net income ratio of 0.63 suggests a good balance between profitability and cash flow.

Breakdown	TTM	May 2025	May 2024	May 2023	May 2022	May 2021
Income Statement
Total Revenue	3.27B	3.09B	3.43B	3.61B	4.07B	2.13B
Gross Profit	416.60M	388.60M	439.80M	336.50M	395.50M	370.84M
EBITDA	253.40M	221.20M	287.50M	201.30M	316.80M	268.36M
Net Income	124.60M	110.70M	154.70M	87.10M	180.40M	171.01M
Balance Sheet
Total Assets	2.15B	1.96B	1.87B	1.76B	2.08B	1.37B
Cash, Cash Equivalents and Short-Term Investments	89.80M	38.00M	40.20M	32.70M	20.05M	17.46M
Total Debt	278.80M	227.90M	223.90M	80.40M	153.90M	8.11M
Total Liabilities	803.10M	763.90M	748.90M	609.80M	817.66M	551.82M
Stockholders Equity	1.12B	1.07B	985.30M	1.03B	1.13B	661.33M
Cash Flow
Free Cash Flow	72.50M	99.90M	96.10M	269.54M	3.05M	123.75M
Operating Cash Flow	200.70M	230.30M	199.50M	315.01M	39.49M	152.55M
Investing Cash Flow	-138.30M	-129.10M	-132.00M	-22.15M	-395.35M	-27.69M
Financing Cash Flow	-24.70M	-48.50M	-60.00M	-280.23M	358.45M	-116.68M

Worthington Steel, Inc. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 44.07
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WS, the sentiment is Positive. The current price of 44.07 is above the 20-day moving average (MA) of 43.96, above the 50-day MA of 39.53, and above the 200-day MA of 32.58, indicating a bullish trend. The MACD of 1.77 indicates Positive momentum. The RSI at 54.65 is Neutral, neither overbought nor oversold. The STOCH value of 14.26 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WS.

Worthington Steel, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WS	77 Outperform	$2.23B	17.81	11.71%	1.78%	-0.75%	-13.51%
SIM	73 Outperform	$5.17B	26.95	5.84%	―	-16.81%	-67.68%
ACNT	64 Neutral	$165.29M	186.64	-3.84%	―	-29.03%	―
GGB	63 Neutral	$7.76B	15.60	5.21%	2.92%	-2.53%	-36.08%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
SID	53 Neutral	$2.17B	-8.19	-10.50%	―	-5.79%	-5.30%

Worthington Steel, Inc. Corporate Events

Worthington Steel to Acquire Kloeckner in Major Deal

On January 15, 2026, Worthington Steel agreed a Business Combination Agreement to acquire German-listed Kloeckner & Co via an all-cash voluntary public takeover offer at €11 per share, backed by Kloeckner’s largest shareholder SWOCTEM GmbH, which has committed to tender its roughly 42% stake. The deal, which is subject to a 65% minimum acceptance threshold, regulatory approvals and other customary conditions, will be financed with a mix of cash and fully underwritten new debt, supported by an equity commitment of up to €1.632 billion and about US$1.9 billion in debt commitments, and is expected to close in the second half of 2026, tripling Worthington Steel’s sales to around $9.5 billion, creating the second-largest steel service center in North America, and delivering an estimated $150 million in annual run-rate synergies and substantially accretive earnings, while temporarily lifting leverage to around 4x before targeted deleveraging. The combination of Worthington Steel’s and Kloeckner’s complementary metal processing operations across North America and Europe is set to broaden products, end markets and geographic reach, with Kloeckner’s management expected to remain in place and both companies committing to an integration process designed to capture scale-driven efficiencies, enhance strategic offerings in key product categories and regions, and reinforce their shared emphasis on operational excellence for customers, employees and shareholders.

The most recent analyst rating on (WS) stock is a Buy with a $45.00 price target. To see the full list of analyst forecasts on Worthington Steel, Inc. stock, see the WS Stock Forecast page.

Worthington Steel posts stronger Q2 results, raises profitability

On December 17, 2025, Worthington Steel reported its fiscal 2026 second-quarter results for the period ended November 30, 2025, posting an 18% year-over-year increase in net sales to $871.9 million driven largely by higher direct volumes and higher average direct selling prices, partially offset by lower toll volumes following the May 2025 closure of its Cleveland toll-processing facility and softer mill demand. Gross margin rose by $13.2 million to $93.2 million on stronger direct spreads and a smaller inventory holding loss, lifting operating income to $21.7 million and net earnings attributable to controlling interest to $18.8 million, or $0.37 per diluted share, with adjusted earnings per diluted share nearly doubling to $0.38 versus the prior year; management highlighted these results, along with a quarterly dividend declaration of $0.16 per share payable in March 2026, as evidence that its strategic focus on higher-value solutions and disciplined mix is strengthening profitability despite mixed market conditions.

The most recent analyst rating on (WS) stock is a Buy with a $40.00 price target. To see the full list of analyst forecasts on Worthington Steel, Inc. stock, see the WS Stock Forecast page.