Olympic Steel Stock Intrinsic Value – Olympic Steel’s Improved Fundamentals Could Lead to Over-Earnings Despite Potential Recessionary Headwinds in Q4 2022.

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Olympic Steel Stock Intrinsic Value – Olympic Steel ($NASDAQ:ZEUS) is a premier flat-rolled steel producer and processor with a long history of delivering quality steel products to its customers. In recent years, the company’s fundamentals have seen major improvements, resulting in better than expected performance. The main reason behind Olympic Steel’s robust fundamentals is the reduction of their multiple to 4x EBITDA. This multiple is lower than average and it has been driven by market conditions, proving the old saying “don’t buy steel stocks going into a potential recession” to be true. This has resulted in Olympic Steel having a better margin profile than most of its competitors and allowing it to outpace its peers in terms of earnings growth.

Moreover, Olympic Steel’s strategy of focusing on the development of high-value and specialty steel products, as opposed to the traditional commodities, has also proven to be a successful move. This strategy has enabled the company to increase its average selling price, which has in turn allowed them to increase gross margins and deliver more reliable earnings. As of now, it appears that Olympic Steel is well-positioned to benefit from any potential recessionary headwinds. The company’s strong fundamentals and sound strategy seem to be able to withstand any economic downturn.

Stock Price

Olympic Steel, whose stock opened at $49.8 and closed at $52.5 on Tuesday, enjoyed a 5.3% jump from previous closing prices. These fundamentals include their competitive cost structure, strategically located assets and commitment to operational excellence, complemented by their experienced management team. All of these elements have improved their balance sheet position, increased their financial flexibility and provided them with a strong foundation to seek growth opportunities and capitalize on favorable market conditions. Live Quote…

About the Company

Income Snapshot

Below shows the total revenue, net income and net margin for Olympic Steel. More…

Cash Flow Snapshot

Below shows the cash from operations, investing and financing for Olympic Steel. More…

Balance Sheet Snapshot

Below shows the total assets, liabilities and book value per share for Olympic Steel. More…

Key Ratios Snapshot

Some of the financial key ratios for Olympic Steel are shown below. More…

Analysis – Olympic Steel Stock Intrinsic Value

We at GoodWhale have conducted an analysis of OLYMPIC STEEL‘s fundamentals, and our proprietary Valuation Line has estimated OLYMPIC STEEL’s intrinsic value to be around $30.5. However, OLYMPIC STEEL is currently trading at a much higher price of $52.5, which implies that the stock is overvalued by 72.4%. We believe that investors should keep this discrepancy in mind before making any investment decisions in OLYMPIC STEEL shares. More…

Peers

The steel industry is highly competitive, with Olympic Steel Inc facing off against Reliance Steel & Aluminum Co, Commercial Metals Co, and Lohakit Metal PCL. All four companies are vying for market share in the global steel market.

– Reliance Steel & Aluminum Co ($NYSE:RS)

Reliance Steel & Aluminum Co is a metals service center company. The Company provides value-added metals processing services and distributes a line of approximately 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel and specialty metals. The Company operates through metals service centers segment. As of December 31, 2016, the Company operated through a network of approximately 300 metals service centers located in 39 states in the United States and in 13 other countries, including Australia, Belgium, Canada, China, France, Mexico, Singapore, South Korea, Spain, the Netherlands, the United Kingdom and Vietnam.

– Commercial Metals Co ($NYSE:CMC)

Commercial Metals Company is an American recycling company headquartered in Irving, Texas. The company manufactures, recycles and markets steel and metal products, related materials and services through a network including steel minimills, steel recycling facilities, downstream metals recyclers and metal fabrication plants.

As of 2022, Commercial Metals Company had a market capitalization of 5.59 billion dollars and a return on equity of 30.45%. The company’s strong financial position and commitment to shareholder value creation through disciplined reinvestment has resulted in consistent returns for investors over time. Commercial Metals Company is a well-positioned player in the global steel and metals industry, with a diversified product offering, a robust recycling platform and a growing presence in high-growth markets.

– Lohakit Metal PCL ($SET:LHK)

Lohakit Metal Public Company Limited is a Thailand-based company engaged in the manufacture and distribution of aluminum products and other metal products. The Company’s products include aluminum sheets, coils and strips, aluminum pipes and tubes, aluminum bars and rods, aluminum wire rods, aluminum plates, and others. It also provides services in aluminum product processing, such as cutting, punching, bending and welding. The Company operates its business through two business segments: aluminum products and others. The Company has its manufacturing plants located in Rayong Province and Samut Sakhon Province, Thailand.

Summary

Olympic Steel has experienced strong improvements in its fundamentals, making it a potentially profitable investment. Despite an uncertain outlook, there are several key factors that make this a strong investment opportunity. These include their diversified customer base, efficient cost structure, and improved operating performance. Therefore, investors should consider adding Olympic Steel to their portfolio for a potential profitable investment.