TSX:RUS

Stock Analysis Report

Executive Summary

Russel Metals Inc. distributes steel and metal products in North America.

Rewards

Trading at 25.7% below its fair value

Earnings are forecast to grow 10.14% per year

Pays a high and reliable dividend of 6.67%

Risk Analysis

Has a high level of debt

Profit margins (3.3%) are lower than last year (5.2%)



Snowflake Analysis

6 star dividend payer and good value.


Similar Companies

Worthington Industries

NYSE:WOR

Share Price & News

How has Russel Metals's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: RUS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.1%

RUS

-1.6%

CA Trade Distributors

-5.3%

CA Market


1 Year Return

-3.5%

RUS

8.9%

CA Trade Distributors

-1.6%

CA Market

Return vs Industry: RUS underperformed the Canadian Trade Distributors industry which returned 8.5% over the past year.

Return vs Market: RUS underperformed the Canadian Market which returned 10.4% over the past year.


Shareholder returns

RUSIndustryMarket
7 Day-1.1%-1.6%-5.3%
30 Day-0.5%-0.08%-4.2%
90 Day5.9%8.4%0.3%
1 Year3.3%-3.5%12.5%8.9%1.4%-1.6%
3 Year-0.9%-17.1%19.2%9.1%-4.3%-11.9%
5 Year31.6%-4.3%63.7%39.2%10.3%-4.2%

Price Volatility Vs. Market

How volatile is Russel Metals's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Russel Metals undervalued compared to its fair value and its price relative to the market?

28.6%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RUS (CA$22.8) is trading below our estimate of fair value (CA$30.7)

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


Price To Earnings Ratio

PE vs Industry: RUS is good value based on its PE Ratio (10.9x) compared to the Trade Distributors industry average (14.6x).

PE vs Market: RUS is good value based on its PE Ratio (10.9x) compared to the Canadian market (15.8x).


Price to Earnings Growth Ratio

PEG Ratio: RUS is poor value based on its PEG Ratio (1.1x)


Price to Book Ratio

PB vs Industry: RUS is overvalued based on its PB Ratio (1.4x) compared to the CA Trade Distributors industry average (1x).


Next Steps

Future Growth

How is Russel Metals forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

10.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RUS's forecast earnings growth (10.1% per year) is above the savings rate (1.4%).

Earnings vs Market: RUS's earnings (10.1% per year) are forecast to grow faster than the Canadian market (9.9% per year).

High Growth Earnings: RUS's earnings are forecast to grow, but not significantly.

Revenue vs Market: RUS's revenue is expected to decline over the next 3 years (-1.6% per year).

High Growth Revenue: RUS's revenue is forecast to decline over the next 3 years (-1.6% 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 (12.5%).


Next Steps

Past Performance

How has Russel Metals performed over the past 5 years?

26.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RUS has high quality earnings.

Growing Profit Margin: RUS's current net profit margins (3.3%) are lower than last year (5.2%).


Past Earnings Growth Analysis

Earnings Trend: RUS's earnings have grown significantly by 26.3% per year over the past 5 years.

Accelerating Growth: RUS's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: RUS had negative earnings growth (-35.6%) over the past year, making it difficult to compare to the Trade Distributors industry average (-5.2%).


Return on Equity

High ROE: RUS's Return on Equity (13.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Russel Metals's financial position?


Financial Position Analysis

Short Term Liabilities: RUS's short term assets (CA$1.6B) exceed its short term liabilities (CA$515.7M).

Long Term Liabilities: RUS's short term assets (CA$1.6B) exceed its long term liabilities (CA$575.7M).


Debt to Equity History and Analysis

Debt Level: RUS's debt to equity ratio (58.9%) is considered high.

Reducing Debt: RUS's debt to equity ratio has increased from 48.8% to 58.9% over the past 5 years.

Debt Coverage: RUS's debt is well covered by operating cash flow (37.9%).

Interest Coverage: RUS's interest payments on its debt are well covered by EBIT (5.5x coverage).


Balance Sheet

Inventory Level: RUS has a high level of physical assets or inventory.

Debt Coverage by Assets: RUS's debt is covered by short term assets (assets are 2.8x debt).


Next Steps

Dividend

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

6.78%

Current Dividend Yield


Dividend Yield vs Market

company6.8%marketbottom25%2.0%markettop25%5.5%industryaverage3.0%forecastin3Years6.8%

Current dividend yield vs market & industry

Notable Dividend: RUS's dividend (6.67%) is higher than the bottom 25% of dividend payers in the Canadian market (1.88%).

High Dividend: RUS's dividend (6.67%) is in the top 25% of dividend payers in the Canadian market (5.48%)


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.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (73%), RUS's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RUS's dividends in 3 years are forecast to be covered by earnings (70.2% payout ratio).


Next Steps

Management

What is the CEO of Russel Metals's salary, the management and board of directors tenure and is there insider trading?

9.0yrs

Average management tenure


CEO

John Reid (50yo)

1.7yrs

Tenure

CA$6,349,494

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  ...


CEO Compensation Analysis

Compensation vs Market: John's total compensation ($USD4.86M) is above average for companies of similar size in the Canadian market ($USD1.63M).

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


Management Age and Tenure

9.0yrs

Average Tenure

Experienced Management: RUS's management team is seasoned and experienced (9 years average tenure).


Board Age and Tenure

7.2yrs

Average Tenure

65.5yo

Average Age

Experienced Board: RUS's board of directors are considered experienced (7.2 years average tenure).


Insider Trading

Insider Buying: RUS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellCA$205,02218 Dec 19
Brian Hedges
EntityIndividual
Role
Member of the Board of Directors
Non-Independent Director
Shares9,000
Max PriceCA$22.80
BuyCA$127,98013 Sep 19
John Clark
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares6,000
Max PriceCA$21.33
BuyCA$176,85828 Aug 19
Brian Hedges
EntityIndividual
Role
Member of the Board of Directors
Non-Independent Director
Shares9,000
Max PriceCA$19.84
BuyCA$96,85627 Aug 19
Annie Thabet
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares4,900
Max PriceCA$20.21
BuyCA$39,00026 Aug 19
William O'Reilly
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,000
Max PriceCA$19.50
BuyCA$61,61422 Aug 19
John Clark
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares3,000
Max PriceCA$20.55
BuyCA$100,90021 Aug 19
William O'Reilly
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares5,000
Max PriceCA$20.18
BuyCA$50,85121 Aug 19
James Dinning
EntityIndividual
Role
Chairman of the Board
Chair of the Board
Shares2,500
Max PriceCA$20.34
SellCA$243,22527 Feb 19
Alain Benedetti
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares10,000
Max PriceCA$24.32
BuyCA$59,35212 Feb 19
Barbara Jeremiah
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,585
Max PriceCA$22.96

Ownership Breakdown

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


Management Team

  • Marion Britton

    Executive VP

    • Tenure: 11.9yrs
    • Compensation: CA$2.53m
  • Lesley M. Coleman

    VP, Controller & Assistant Secretary

    • Tenure: 15yrs
    • Compensation: CA$288.79k
  • Sherri McKelvey

    Assistant Secretary

    • John Reid (50yo)

      CEO, President & Director

      • Tenure: 1.7yrs
      • Compensation: CA$6.35m
    • Dean Rougas

      President of Spartan Steel Products Division

      • Tenure: 9yrs
    • Ryan MacDermid

      Vice President of Risk Management & Legal

      • Tenure: 4.8yrs
    • Reynold Wilden

      President of Pioneer Pipe


      Board Members

      • Barbara Jeremiah (67yo)

        Independent Director

        • Tenure: 3.7yrs
        • Compensation: CA$148.50k
      • John Tulloch (72yo)

        Independent Director

        • Tenure: 6.7yrs
        • Compensation: CA$154.30k
      • Brian Hedges (66yo)

        Non-Independent Director

        • Tenure: 10.7yrs
        • Compensation: CA$2.54m
      • Bill O'Reilly (70yo)

        Independent Director

        • Tenure: 10.7yrs
        • Compensation: CA$152.35k
      • Jim Dinning (65yo)

        Chair of the Board

        • Tenure: 5.7yrs
        • Compensation: CA$247.00k
      • John Clark (64yo)

        Independent Director

        • Tenure: 7.7yrs
        • Compensation: CA$157.50k
      • Alice Laberge (62yo)

        Independent Director

        • Tenure: 12.5yrs
        • Compensation: CA$152.00k
      • Alain Benedetti (70yo)

        Independent Director

        • Tenure: 13.9yrs
        • Compensation: CA$150.65k
      • John Reid (50yo)

        CEO, President & Director

        • Tenure: 1.7yrs
        • Compensation: CA$6.35m
      • Annie Thabet (58yo)

        Independent Director

        • Tenure: 2yrs
        • Compensation: CA$144.00k

      Company Information

      Russel Metals Inc.'s company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Russel Metals Inc.
      • Ticker: RUS
      • Exchange: TSX
      • Founded: 1929
      • Industry: Trading Companies and Distributors
      • Sector: Capital Goods
      • Market Cap: CA$1.394b
      • Shares outstanding: 62.17m
      • Website: https://www.russelmetals.com

      Number of Employees


      Location

      • Russel Metals Inc.
      • 6600 Financial Drive
      • Mississauga
      • Ontario
      • L5N 7J6
      • Canada

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      RUSTSX (The Toronto Stock Exchange)YesCommon SharesCACADApr 1973
      RUSM.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDApr 1973
      RMZDB (Deutsche Boerse AG)YesCommon SharesDEEURApr 1973

      Biography

      Russel Metals Inc. distributes steel and metal products in North America. The company operates through three segments: Metal Service Centers, Energy Products, and Steel Distributors. The Metal Service Center segment sells plates, flat rolled carbon and general line steel products, stainless steel, aluminum, and other non-ferrous specialty metal products. It also offers services, such as shearing, slitting, and cutting to length; laser, oxy-feel, and plasma cutting; stretcher and traditional leveling; beam drilling, notching, coping, and tee-splitting; tube laser processing and saw cutting; edge trimming; and cambering. This segment serves customers in industries, such as machinery and equipment manufacturing, construction, ship building, and natural resources. The Energy Products segment distributes oil country tubular goods, line pipes, tubes, flanges, valves, and fittings primarily to energy industry. The Steel Distributors segment operates as a steel distributor for steel service centers and equipment manufactures. Russel Metals Inc. was founded in 1929 and is headquartered in Mississauga, Canada. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/26 23:51
      End of Day Share Price2020/01/24 00:00
      Earnings2019/09/30
      Annual Earnings2018/12/31


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.