Russel Metals (TSX:RUS) - Share price, News & Analysis

Q: What is the Fair Price of RUS when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

RUS (CA$25.74) is trading below our estimate of [[fair value]] (CA$52.4)

RUS fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	0/6
Past Performance	6/6
Financial Health	6/6
Dividends	6/6

RUS Stock Overview

Russel Metals Inc. operates as a metal distribution company in North America.

Rewards

Trading at 50.9% below our estimate of its fair value

Earnings grew by 376% over the past year

Pays a high and reliable dividend of 5.91%

Risk Analysis

Earnings are forecast to decline by an average of 48.1% per year for the next 3 years

Russel Metals Competitors

Richelieu Hardware

TSX:RCH

CA$1.9b

Finning International

TSX:FTT

CA$4.2b

Wajax

TSX:WJX

CA$435.7m

Hardwoods Distribution

TSX:HDI

CA$669.5m

Price History & Performance

Summary of all time highs, changes and price drops for Russel Metals
Historical stock prices
Current Share Price	CA$25.74
52 Week High	CA$37.57
52 Week Low	CA$24.65
Beta	1.56
1 Month Change	-19.21%
3 Month Change	-22.28%
1 Year Change	-24.00%
3 Year Change	14.50%
5 Year Change	1.06%
Change since IPO	94.26%

Recent News & Updates

Jun 10

Russel Metals (TSE:RUS) Seems To Use Debt Rather Sparingly

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that...

Shareholder Returns

	RUS	CA Trade Distributors	CA Market
7D	1.3%	2.0%	0.3%
1Y	-24.0%	-12.1%	-3.7%

Return vs Industry: RUS underperformed the Canadian Trade Distributors industry which returned -11.3% over the past year.

Return vs Market: RUS underperformed the Canadian Market which returned -2.9% over the past year.

Price Volatility

Is RUS's price volatile compared to industry and market?
RUS volatility
RUS Average Weekly Movement	4.8%
Trade Distributors Industry Average Movement	6.0%
Market Average Movement	10.0%
10% most volatile stocks in CA Market	17.2%
10% least volatile stocks in CA Market	4.4%

Stable Share Price: RUS is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: RUS's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1929	3,300	John Reid	https://www.russelmetals.com

Russel Metals Inc. operates as a metal distribution company in North America. The company operates through three segments: Metals Service Centers, Energy Products, and Steel Distributors. The Metal Service Centers segment sells plates, flat rolled carbon, stainless steel, aluminum, and other non-ferrous specialty metal products, as well as general line steel products, such as plates, structural shapes, bars, sheets, pipes, tubing, and hollow structural steel tubing.

Russel Metals Fundamentals Summary

How do Russel Metals's earnings and revenue compare to its market cap?
RUS fundamental statistics
Market Cap	CA$1.62b
Earnings (TTM)	CA$450.30m
Revenue (TTM)	CA$4.66b

3.6x

P/E Ratio

0.3x

P/S Ratio

Is RUS overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
RUS income statement (TTM)
Revenue	CA$4.66b
Cost of Revenue	CA$3.43b
Gross Profit	CA$1.23b
Other Expenses	CA$781.50m
Earnings	CA$450.30m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Aug 10, 2022

Earnings per share (EPS)	7.14
Gross Margin	26.42%
Net Profit Margin	9.66%
Debt/Equity Ratio	22.3%

How did RUS perform over the long term?

See historical performance and comparison

Dividends

5.9%

Current Dividend Yield

21%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is RUS undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for RUS?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for RUS. This is calculated by dividing RUS's market cap by their current preferred multiple.
What is RUS's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$1.62b

RUS key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.4x
Enterprise Value/EBITDA	2.9x
PEG Ratio	-0.07x

Price to Earnings Ratio vs Peers

How does RUS's PE Ratio compare to its peers?

RUS PE Ratio vs Peers

The above table shows the PE ratio for RUS vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	8.8x
RCH Richelieu Hardware	12.8x	-0.9%	CA$1.9b
FTT Finning International	10.9x	11.4%	CA$4.2b
WJX Wajax	7.7x	n/a	CA$435.7m
HDI Hardwoods Distribution	3.9x	-2.9%	CA$669.5m
RUS Russel Metals	3.6x	-48.1%	CA$1.6b

Forward PE

Price-To-Earnings vs Peers: RUS is good value based on its Price-To-Earnings Ratio (3.6x) compared to the peer average (8.8x).

Price to Earnings Ratio vs Industry

How does RUS's PE Ratio compare vs other companies in the North American Trade Distributors Industry?

Price-To-Earnings vs Industry: RUS is good value based on its Price-To-Earnings Ratio (3.6x) compared to the Canadian Trade Distributors industry average (4.4x)

Price to Earnings Ratio vs Fair Ratio

What is RUS's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

RUS PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	3.6x
Fair PE Ratio	5x

Price-To-Earnings vs Fair Ratio: RUS is good value based on its Price-To-Earnings Ratio (3.6x) compared to the estimated Fair Price-To-Earnings Ratio (5x).

Share Price vs Fair Value

What is the Fair Price of RUS when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: RUS (CA$25.74) is trading below our estimate of fair value (CA$52.4)

Significantly Below Fair Value: RUS is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: RUS's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

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Future Growth

How is Russel Metals forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-48.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: RUS's earnings are forecast to decline over the next 3 years (-48.1% per year).

Earnings vs Market: RUS's earnings are forecast to decline over the next 3 years (-48.1% per year).

High Growth Earnings: RUS's earnings are forecast to decline over the next 3 years.

Revenue vs Market: RUS's revenue is expected to decline over the next 3 years (-8.7% per year).

High Growth Revenue: RUS's revenue is forecast to decline over the next 3 years (-8.7% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: RUS's Return on Equity is forecast to be low in 3 years time (11.8%).

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Past Performance

How has Russel Metals performed over the past 5 years?

Past Performance Score

6/6

Past Performance Score 6/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

20.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: RUS has high quality earnings.

Growing Profit Margin: RUS's current net profit margins (9.7%) are higher than last year (3.4%).

Past Earnings Growth Analysis

Earnings Trend: RUS's earnings have grown significantly by 20% per year over the past 5 years.

Accelerating Growth: RUS's earnings growth over the past year (376%) exceeds its 5-year average (20% per year).

Earnings vs Industry: RUS earnings growth over the past year (376%) exceeded the Trade Distributors industry 55.6%.

Return on Equity

High ROE: RUS's Return on Equity (34.1%) is considered high.

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Financial Health

How is Russel Metals's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: RUS's short term assets (CA$1.7B) exceed its short term liabilities (CA$592.6M).

Long Term Liabilities: RUS's short term assets (CA$1.7B) exceed its long term liabilities (CA$438.9M).

Debt to Equity History and Analysis

Debt Level: RUS's net debt to equity ratio (11.3%) is considered satisfactory.

Reducing Debt: RUS's debt to equity ratio has reduced from 45.1% to 22.3% over the past 5 years.

Debt Coverage: RUS's debt is well covered by operating cash flow (85.1%).

Interest Coverage: RUS's interest payments on its debt are well covered by EBIT (23.5x coverage).

Balance Sheet

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Dividend

What is Russel Metals's current dividend yield, its reliability and sustainability?

Dividend Score

6/6

Dividend Score 6/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

5.91%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: RUS's dividend (5.91%) is higher than the bottom 25% of dividend payers in the Canadian market (2%).

High Dividend: RUS's dividend (5.91%) is in the top 25% of dividend payers in the Canadian market (5.26%)

Stability and Growth of Payments

Stable Dividend: RUS's dividends per share have been stable in the past 10 years.

Growing Dividend: RUS's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (21.2%), RUS's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (43.6%), RUS's dividend payments are well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

6.8yrs

Average management tenure

CEO

John Reid (52 yo)

6.42yrs

Tenure

CA$11,271,070

Compensation

Mr. John Gregory Reid has been the President at Russel Metals Inc. since January 01, 2016 and has been its Chief Executive Officer since May 2, 2018. Mr. Reid served as Chief Operating Officer at Russel Me...

CEO Compensation Analysis

Compensation vs Market: John's total compensation ($USD8.74M) is above average for companies of similar size in the Canadian market ($USD2.42M).

Compensation vs Earnings: John's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: RUS's management team is seasoned and experienced (6.8 years average tenure).

Board Members

Experienced Board: RUS's board of directors are considered experienced (7.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/29 00:00
End of Day Share Price	2022/06/29 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31