Shareholders in Reliance Steel & Aluminum Co. (NYSE:RS) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Reliance Steel & Aluminum will make substantially more sales than they'd previously expected.
After the upgrade, the five analysts covering Reliance Steel & Aluminum are now predicting revenues of US$13b in 2021. If met, this would reflect a substantial 25% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$12b of revenue in 2021. It looks like there's been a clear increase in optimism around Reliance Steel & Aluminum, given the nice increase in revenue forecasts.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Reliance Steel & Aluminum's growth to accelerate, with the forecast 57% annualised growth to the end of 2021 ranking favourably alongside historical growth of 2.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 0.3% per year. It seems obvious that as part of the brighter growth outlook, Reliance Steel & Aluminum is expected to grow faster than the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Reliance Steel & Aluminum this year. The analysts also expect revenues to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Reliance Steel & Aluminum.
Better yet, our automated discounted cash flow calculation (DCF) suggests Reliance Steel & Aluminum could be moderately undervalued. You can learn more about our valuation methodology on our platform here.
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