Analysts maintain ratings on service center Reliance Steel & Aluminum

Oct 26, 2009 | 09:16 AM | Corinna Petry

A trio of analysts held fast to their ratings on Reliance Steel & Aluminum Co., but each had different approaches to their fourth-quarter and 2010 earnings estimates for the national service center chain, citing the company's own cautious outlook.

Los Angeles-based Reliance reported net income of nearly $41.8 million in contrast to a $5.8-million net loss in the second quarter but still down 72.6 percent from earnings of $152.5 million in the third quarter last year (AMM, Oct. 23).

KeyBanc Capital Markets Inc., Cleveland, reiterated its "Buy" rating on Reliance's shares, but trimmed its above-consensus 2009 estimate to $1.30 per share from $1.35, which includes a 54-cent-per share estimate for fourth-quarter earnings vs. its earlier forecast of 66 cents.

"(Reliance) remains one of our top value picks in the metals and mining space. Over the course of the cycle, we believe the company will outperform other service centers, given excellent working capital management and its focus on small orders to a broadly diversified customer base," KeyBanc analyst Mark L. Parr said in a research note. "Near-term earnings appear constrained (due to the) ongoing economic miasma, but the potential upside for (Reliance shares) is intensified, given low supply chain inventories and the potential for persistent supplier discipline."....