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Olympic Steel, Inc. (ZEUS) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Olympic Steel (ZEUS - Free Report) ? Shares have been on the move with the stock up 19.3% over the past month. The stock hit a new 52-week high of $55.43 in the previous session. Olympic Steel has gained 64.5% since the start of the year compared to the 7.2% move for the Zacks Basic Materials sector and the 22.9% return for the Zacks Steel - Producers industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 23, 2023, Olympic Steel reported EPS of $0.27 versus consensus estimate of $0.21.
For the current fiscal year, Olympic Steel is expected to post earnings of $3.49 per share on $2.31 billion in revenues. This represents a -54.95% change in EPS on a -9.88% change in revenues. For the next fiscal year, the company is expected to earn $4.28 per share on $2.23 billion in revenues. This represents a year-over-year change of 22.43% and -3.45%, respectively.
Valuation Metrics
Olympic Steel may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Olympic Steel has a Value Score of B. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 15.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 11X. On a trailing cash flow basis, the stock currently trades at 5.6X versus its peer group's average of 2.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Olympic Steel currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Olympic Steel passes the test. Thus, it seems as though Olympic Steel shares could still be poised for more gains ahead.
How Does ZEUS Stack Up to the Competition?
Shares of ZEUS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ternium S.A. (TX - Free Report) . TX has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Ternium S.A. beat our consensus estimate by 11.11%, and for the current fiscal year, TX is expected to post earnings of $6.04 per share on revenue of $14.37 billion.
Shares of Ternium S.A. have gained 8% over the past month, and currently trade at a forward P/E of 7.29X and a P/CF of 3.71X.
The Steel - Producers industry is in the top 8% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ZEUS and TX, even beyond their own solid fundamental situation.
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Olympic Steel, Inc. (ZEUS) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Olympic Steel (ZEUS - Free Report) ? Shares have been on the move with the stock up 19.3% over the past month. The stock hit a new 52-week high of $55.43 in the previous session. Olympic Steel has gained 64.5% since the start of the year compared to the 7.2% move for the Zacks Basic Materials sector and the 22.9% return for the Zacks Steel - Producers industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 23, 2023, Olympic Steel reported EPS of $0.27 versus consensus estimate of $0.21.
For the current fiscal year, Olympic Steel is expected to post earnings of $3.49 per share on $2.31 billion in revenues. This represents a -54.95% change in EPS on a -9.88% change in revenues. For the next fiscal year, the company is expected to earn $4.28 per share on $2.23 billion in revenues. This represents a year-over-year change of 22.43% and -3.45%, respectively.
Valuation Metrics
Olympic Steel may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Olympic Steel has a Value Score of B. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 15.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 11X. On a trailing cash flow basis, the stock currently trades at 5.6X versus its peer group's average of 2.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Olympic Steel currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Olympic Steel passes the test. Thus, it seems as though Olympic Steel shares could still be poised for more gains ahead.
How Does ZEUS Stack Up to the Competition?
Shares of ZEUS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ternium S.A. (TX - Free Report) . TX has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Ternium S.A. beat our consensus estimate by 11.11%, and for the current fiscal year, TX is expected to post earnings of $6.04 per share on revenue of $14.37 billion.
Shares of Ternium S.A. have gained 8% over the past month, and currently trade at a forward P/E of 7.29X and a P/CF of 3.71X.
The Steel - Producers industry is in the top 8% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ZEUS and TX, even beyond their own solid fundamental situation.