Reliance (RS, Financial) is projecting stable demand across its diverse markets for the second quarter of 2025, despite ongoing economic policy uncertainties at both domestic and international levels. The company forecasts that the volume of tons sold will fluctuate between a 1% decrease and a 1% increase compared to the first quarter of 2025. This projection aligns with typical seasonal patterns and is bolstered by robust demand in the non-residential construction sector and strategic initiatives aimed at reclaiming market share.
When compared to the same quarter in 2024, Reliance anticipates a sales volume increase of 3% to 5%. Additionally, the company expects it will see a rise in the average selling price per ton, projecting an increase of 1% to 3% over the previous quarter.
Reliance is also optimistic about its First-In, First-Out (FIFO) gross profit margin for the second quarter of 2025. This expectation is driven by pricing improvements observed in March, which have persisted into April, suggesting a positive outlook for profitability. These developments underscore Reliance's commitment to navigating market challenges while capitalizing on growth opportunities.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for Reliance Inc (RS, Financial) is $328.03 with a high estimate of $362.00 and a low estimate of $307.23. The average target implies an upside of 15.87% from the current price of $283.11. More detailed estimate data can be found on the Reliance Inc (RS) Forecast page.
Based on the consensus recommendation from 9 brokerage firms, Reliance Inc's (RS, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Reliance Inc (RS, Financial) in one year is $264.96, suggesting a downside of 6.41% from the current price of $283.11. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Reliance Inc (RS) Summary page.
Key Business Developments
Release Date: February 20, 2025
- Revenue from Acquisitions: Added approximately $400 million of net sales on an annualized basis from four acquisitions in 2024.
- Non-GAAP Earnings Per Share (EPS): $15.92 for the full year 2024.
- Cash Flow from Operations: $1.43 billion, the third highest in the company's history.
- Capital Expenditures: $430 million in 2024, with a 2025 budget of $325 million.
- Share Repurchases: $1.1 billion in 2024, resulting in a 6% reduction in outstanding shares.
- Dividends: $250 million returned to stockholders in 2024.
- Gross Profit Margin: 29.7% for the full year 2024.
- Fourth Quarter Tons Sold: Decreased 5.1% compared to Q3 2024, but increased 6.7% year-over-year.
- Average Selling Price per Ton: $2,170 in Q4 2024, a decline of 3.4% from Q3 2024.
- Non-GAAP SG&A Expense: Increased by 1.3% year-over-year in Q4 2024.
- Impairment Charges: $11.7 million in Q4 2024.
- Net Debt-to-EBITDA Ratio: Less than one.
- First Quarter 2025 Earnings Guidance: Non-GAAP EPS expected to be in the range of $3.30 to $3.50.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Reliance Inc (RS, Financial) achieved a strong full-year gross profit margin of 29.7%, within their sustainable annual range.
- The company successfully acquired and integrated four companies in 2024, adding approximately $400 million in net sales and expanding their geographic footprint.
- Reliance Inc (RS) reported a non-GAAP earnings per share of $15.92, reflecting the benefits of targeted growth strategies and strong pricing discipline.
- The company generated the third highest annual cash flow from operations in its history, amounting to $1.43 billion.
- Reliance Inc (RS) maintained a balanced and disciplined approach to capital deployment, investing significantly in capital expenditures, acquisitions, share repurchases, and dividends.
Negative Points
- Fourth quarter tons sold decreased by 5.1% compared to the third quarter of 2024, although this was better than the expected decline.
- The average selling price per ton declined by 3.4% in the fourth quarter compared to the third quarter of 2024.
- The semiconductor industry shipments remained restrained in the fourth quarter due to excess inventories in the supply chain.
- The company incurred impairment charges of $11.7 million in Q4 associated with the consolidation of operations to streamline efficiencies.
- Reliance Inc (RS) experienced a sequential decline in fourth quarter gross profit margin due to the recognition of LIFO expense, impacting profitability.
