Assessing Reliance (RS) Valuation Following Q3 Revenue Beat and Profit Dip in Construction Markets

Reliance (NYSE:RS) has just released its third-quarter results, with profits slipping a bit compared to last year, but revenues coming in above expectations. Strength in non-residential construction and manufacturing bolstered demand this quarter.

See our latest analysis for Reliance.

After slipping earlier in the year, Reliance’s share price has regained some ground lately, ending at $275.14 and notching a 3.07% bump after results landed. Even so, the 1-year total shareholder return remains down double digits, underscoring how market sentiment has faded compared to previous years of strong gains. Its multi-year track record still stands out for long-term investors.

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With shares rallying after earnings yet still well below last year's highs, the real question is whether Reliance is trading at a bargain right now or if the market has already factored in any rebound in growth.

Most Popular Narrative: 14.9% Undervalued

With Reliance's fair value estimate set at $323 and the latest closing price at $275, the narrative suggests the market may be missing upside potential. This sets the stage for how analysts are weighing future growth drivers in relation to recent stock performance.

Strategic investments in processing, logistics, and acquisitions enhance customer retention and gross margins. Robust cash flow enables shareholder returns and earnings growth.

Read the complete narrative.

Want to know the quantitative engine powering this target? The narrative’s math blends recurring sales, expanding profit margins, and a cautious lens on industry multiples. Uncover which bold projections move the needle for this valuation and see what’s fueling analyst optimism.

Result: Fair Value of $323 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing trade policy uncertainty and climbing input costs could limit Reliance’s margin improvement, which may pose challenges to the upbeat growth outlook.

Find out about the key risks to this Reliance narrative.

Another View: What Does the SWS DCF Model Say?

While analyst price targets suggest Reliance is undervalued, our SWS DCF model offers a contrasting perspective. According to this method, Reliance’s current share price is well above its estimated fair value, indicating that forward-looking expectations may be overly optimistic. Is the market factoring in more future growth than the fundamentals support?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Reliance for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 927 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Reliance Narrative

If you see things differently or want to dig deeper on your own terms, crafting your personal Reliance narrative is quick and insightful. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Reliance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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