Worthington Steel, Inc. (WS) AI Stock Analysis

• Market Cap: $1.64B
• Dividend Yield: 1.78%
• Average Volume (3M): 259.64K
• Price to Earnings (P/E): 22.6
• Beta (1Y): 1.71
• 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: 271,801
• 30 Day Avg. Volume: 259,640
• 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: 1.12
• Enterprise Value/Revenue: 0.56
• Enterprise Value/Gross Profit: 4.39
• Enterprise Value/Ebitda: 7.22
• 1Y Price Target: $47.00
• Price Target Upside: 45.60% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 2.46
• Revenue Forecast (FY): $3.64B

• Rating: 67 Neutral
• Price Target: $35.00 ▲(8.43% Upside)
• Action: Downgraded Date: 03/10/26
• Date: Action: Downgraded 03/10/26

The score is anchored by solid financial fundamentals (low leverage and strong cash conversion) and a constructive earnings update with market-share gains. These are meaningfully offset by weak technicals (bearish momentum and price below key moving averages) and a valuation that is not especially discounted for cyclicality, with M&A adding upside but also integration/financing risk.

Positive Factors

Balance Sheet Strength

Worthington Steel's low debt-to-equity (0.22) and ~52% equity ratio provide durable financial flexibility. This capital structure reduces refinancing and solvency risk, supports working capital needs in a cyclical industry, and underpins the ability to fund strategic moves or weather downturns.

Strong Cash Generation

Robust free-cash-flow growth (42.7% TTM) and operating cash flow exceeding net income (1.61x) indicate efficient cash conversion. This persistent cash generation supports capital expenditure, dividends, deleveraging after M&A, and operational improvements without relying heavily on external financing.

Automotive Market Share Gains

Meaningful market-share gains in Cold Rolled Strip and a 26% increase in direct automotive shipments reflect growing customer traction in higher-value end markets. Durable OEM relationships and wins increase recurring volumes, improve mix toward value-added processing, and strengthen long-term revenue stability.

Negative Factors

Acquisition Leverage & Integration Risk

The proposed Kloeckner acquisition materially increases scale but will temporarily raise leverage to ~4x and relies on substantial new debt and equity commitments. Elevated post-deal leverage and cross-border integration complexity create sustained execution and refinancing risks that can constrain investment and margin recovery.

Reduced Toll Processing Volumes

Closure-driven declines in toll processing remove a stable fee-based revenue stream and reduce capacity for third-party conversions. Loss of toll volumes shifts mix toward direct sales, which can raise exposure to commodity spreads and reduce diversified service revenues that historically smoothed earnings.

Compressed Galvanized Spreads

Sustained compression in galvanized spreads from weak construction demand pressures a higher-margin product line. Because product spreads drive processing profitability, prolonged weakness in construction-related galvanized demand can materially erode gross margins and limit the durability of recent profitability improvements.

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

WS primarily makes money by buying flat-rolled steel from steel producers and reselling it to customers after performing processing and logistics services. Key revenue streams include: (1) sales of processed flat-rolled steel (e.g., slit coil, blanks, and cut-to-length sheet) where revenue is driven by shipment volumes and the spread between selling prices and the company’s steel input costs plus processing costs; (2) toll/processing and other service revenue where customers provide the steel (or title is otherwise managed) and WS earns fees for converting it (slitting/blanking/cut-to-length), packaging, and related handling; and (3) supply chain and inventory management solutions for customers, where WS may manage steel sourcing, scheduling, and just-in-time delivery, monetized through product margins and/or service fees depending on the arrangement. Earnings are also influenced by customer and supplier contracting structures (including pricing formulas and pass-through mechanisms tied to steel indices), the mix of value-added processing versus simple distribution, plant utilization, and demand levels in end markets such as automotive. Specific partnership arrangements, named customers, and the company’s quantitative revenue breakdown by segment are null.

Worthington Steel, Inc. Financial Statement Overview

Summary

Strong balance sheet (low 0.22 debt-to-equity, ~52% equity ratio) supports resilience, while profitability is steady but not exceptional (TTM net margin 3.82%; EBITDA margin 7.76%). Cash generation is a plus (TTM free-cash-flow growth 42.73% and operating cash flow 1.61x net income).

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: Negative
• Last Price: 32.28
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WS, the sentiment is Negative. The current price of 32.28 is below the 20-day moving average (MA) of 39.47, below the 50-day MA of 40.18, and below the 200-day MA of 33.41, indicating a bearish trend. The MACD of -2.49 indicates Positive momentum. The RSI at 21.43 is Positive, neither overbought nor oversold. The STOCH value of 7.63 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WS.

Worthington Steel, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SIM	69 Neutral	$4.90B	61.64	6.07%	―	-16.81%	-67.68%
WS	67 Neutral	$1.64B	22.60	11.57%	1.78%	-0.75%	-13.51%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
GGB	61 Neutral	$6.43B	29.29	2.53%	2.92%	-2.53%	-36.08%
ACNT	46 Neutral	$120.65M	-37.69	1.01%	―	-29.03%	―
SID	45 Neutral	$1.52B	-19.29	-13.62%	―	-5.79%	-5.30%

Worthington Steel, Inc. Corporate Events

Worthington Steel Lowers Threshold in Klöckner Takeover Bid

On March 10, 2026, Worthington Steel’s German subsidiary amended its voluntary all-cash takeover offer for Germany’s Klöckner & Co SE by lowering the minimum acceptance threshold from 65% to 57.5% of outstanding shares, while keeping the €11.00 per-share price unchanged. The move, which extends the acceptance period to March 26, 2026, comes after Worthington Steel had already secured about 56.9% of Kloeckner’s share capital as of March 9, 2026, and is aimed at increasing the likelihood of successfully closing the transaction, which Kloeckner’s management and supervisory boards have endorsed as attractive and appropriate for shareholders.

Worthington Steel previously launched the takeover process in January 2026, offering a 98% premium to Kloeckner’s three-month undisturbed volume-weighted average share price as of December 5, 2025. By pursuing control of Kloeckner, one of the largest producer-independent steel and metal processors with a strong presence in North America and the DACH region, Worthington Steel is positioning itself to expand its service-center and higher value-added steel processing footprint, with potential strategic benefits for both companies’ customers and broader industry consolidation dynamics.

The most recent analyst rating on (WS) stock is a Buy with a $51.00 price target. To see the full list of analyst forecasts on Worthington Steel, Inc. stock, see the WS Stock Forecast page.

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.