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Russel Metals Inc (TSE:RUS)
TSX:RUS
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Russel Metals
(TSX:RUS)
Rating:73Outperform
Price Target:
C$47.00
▲(11.43%Upside)
Russel Metals (RUS) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$2.38B
Dividend Yield4.02%
Average Volume (3M)127.66K
Price to Earnings (P/E)15.9
Beta (1Y)0.99
Revenue Growth-0.13%
EPS Growth-33.06%
CountryCA
Employees3,970
SectorIndustrials
Sector Strength93
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)0.75
Shares Outstanding56,500,000
10 Day Avg. Volume163,671
30 Day Avg. Volume127,655
Financial Highlights & Ratios
PEG Ratio-1.33
Price to Book (P/B)1.36
Price to Sales (P/S)0.00
P/FCF Ratio8.88
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$51.32Price Target Upside21.66% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Russel Metals Business Overview & Revenue Model
Company DescriptionRussel Metals Inc. is one of the largest metals distribution and processing companies in North America. The company operates through three main segments: metals service centers, energy products, and steel distributors. Russel Metals offers a wide array of products including steel, aluminum, and stainless steel in various forms such as bars, pipes, tubes, and other related products. The company serves a diverse customer base across various industries including construction, manufacturing, and energy.
How the Company Makes MoneyRussel Metals generates revenue primarily through the sale and distribution of metal products. The metals service centers segment processes and distributes metal products, serving as a critical link between metal producers and end users. The energy products segment focuses on the distribution of products used in the oil and gas industry, such as oil country tubular goods, line pipe, and fittings. The steel distributors segment buys steel in bulk from producers and sells it to customers, benefiting from economies of scale. Significant revenue drivers include the demand for metal products in construction and industrial sectors, fluctuations in metal prices, and the company's ability to efficiently manage inventory and logistics. Strategic partnerships with metal producers and a strong distribution network also play a crucial role in the company's earnings.
Russel Metals Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q4-2024)
| % Change Since: 4.10%|
Next Earnings Date:Aug 07, 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.Q4-2024 Updates
Positive Updates
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.
Negative Updates
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 Financial Statement Overview
Summary
Russel Metals shows a mix of strengths and weaknesses across its financial statements. The balance sheet reflects strong equity and improved leverage, while cash flow remains robust. However, the income statement indicates declining revenue and profitability challenges.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 |
| 223.00M | 560.20M | 514.10M | 608.40M | 91.30M | EBITDA |
| 315.50M | 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
Positive
42.18
Price Trends
39.71
Positive
40.21
Positive
40.20
Positive
Market Momentum
0.74
Negative
60.94
Neutral
56.26
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:RUS, the sentiment is Positive. The current price of 42.18 is above the 20-day moving average (MA) of 41.32, above the 50-day MA of 39.71, and above the 200-day MA of 40.20, indicating a bullish trend. The MACD of 0.74 indicates Negative momentum. The RSI at 60.94 is Neutral, neither overbought nor oversold. The STOCH value of 56.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:RUS.
Russel Metals Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | C$9.73B | 19.72 | 17.36% | 1.64% | 10.93% | -3.34% | |
77 Outperform | C$1.24B | 11.58 | 10.81% | 5.63% | 3.28% | -14.21% | |
77 Outperform | C$6.73B | 14.04 | 18.79% | 2.20% | 6.61% | 1.87% | |
73 Outperform | $2.38B | 15.88 | 9.30% | 4.02% | -0.13% | -33.06% | |
73 Outperform | C$484.01M | 11.81 | 8.09% | 6.26% | -2.65% | -47.65% | |
65 Neutral | $4.45B | 12.17 | 5.23% | 249.78% | 4.08% | -12.31% | |
56 Neutral | C$1.20B | ― | -9.26% | 3.98% | 1.70% | -154.73% |
* Industrials Sector Average
Performance Comparison
TSE:RUS
Russel Metals
42.18
6.11
16.94%
TSE:FTT
Finning International
50.36
9.97
24.68%
TSE:TIH
Toromont Industries
119.13
2.26
1.93%
TSE:WJX
Wajax Corporation
22.43
-1.98
-8.11%
TSE:MTL
Mullen Group
14.15
1.99
16.37%
TSE:ARE
Aecon Group Inc.
19.20
3.35
21.14%
Russel Metals Corporate Events
Shareholder Meetings
Russel Metals Announces 2025 Shareholder Meeting Results
Positive
May 8, 2025
Russel Metals Inc. announced the results of its 2025 annual meeting of shareholders, where 60.91% of common shares were represented. All nominee directors were elected with strong support, and the advisory ‘say on pay’ resolution was approved by 79.38% of votes. KPMG LLP was appointed as the company’s auditors. This outcome reflects shareholder confidence in the company’s leadership and strategic direction.
Private Placements and FinancingDividendsBusiness Operations and StrategyFinancial Disclosures
Russel Metals Reports Strong Q1 2025 Results and Strategic Expansion
Positive
May 6, 2025
Russel Metals Inc. reported strong financial results for the first quarter of 2025, with revenues reaching $1.2 billion and EBITDA at $86 million, driven by record quarterly shipments and favorable market conditions. The company achieved significant milestones, including a 2.4% increase in quarterly dividends, a $300 million issuance of senior unsecured notes, and a strategic expansion of its U.S. platform, enhancing its capital structure and market positioning.
Private Placements and FinancingBusiness Operations and Strategy
Russel Metals Enhances Financial Flexibility with Credit Facility Amendments
Positive
Apr 29, 2025
Russel Metals Inc. has extended its $450 million credit facilities to April 2029, removing the springing lien provision and maintaining unsecured facilities with investment-grade covenants. The company also canceled a $150 million sidecar facility following a $300 million debt issuance, enhancing liquidity and financial flexibility to support strategic initiatives.
Private Placements and Financing
Russel Metals Secures $300 Million Through Note Offering
Positive
Mar 28, 2025
Russel Metals Inc. has successfully closed a $300 million offering of senior unsecured notes, rated BBB (low) with a stable trend by DBRS Limited. The proceeds will be used for general corporate purposes, potentially enhancing the company’s financial flexibility and supporting its operations across North America.
Private Placements and FinancingBusiness Operations and Strategy
Russel Metals Launches $300 Million Investment Grade Note Offering
Positive
Mar 20, 2025
Russel Metals Inc. has announced a $300 million offering of senior unsecured notes with a 4.423% coupon and a five-year maturity, aimed at re-establishing a base level of lower-cost term debt in its capital structure. This strategic move is part of Russel Metals’ ongoing efforts to strengthen its business portfolio and balance sheet with an investment-grade approach. The notes, which do not include financial or maintenance covenants, are expected to enhance the company’s financial flexibility and are being offered on a private-placement basis in Canada. The offering is led by RBC Capital Markets and Scotia Capital Inc., and is anticipated to close around March 28, 2025.
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.