The metals industry is poised for significant expansion in the coming years, driven primarily by an increase in infrastructural development projects, urbanization and increased adoption of advanced technologies. Given this backdrop, it would be wise to monitor quality metals stocks Norsk Hydro ASA ( NHYDY ), Atkore ( ATKR ), and Ryerson Holding ( RYI ) for future gains. Read on….
The long-term outlook for the metal industry looks promising, bolstered by strong demand for metal and metal products. The expected increase in infrastructure and construction projects is likely to drive the demand for industrial metals.
For this purpose, Norsk Hydro ASA's intrinsically strong metal reserves (No.), Atkore Inc. (ATKR), and Ryerson Holding Corporation (RYI) can be smart portfolio additions now.
The metals industry stands as a fundamental pillar in a country's development, supplying essential raw materials and critical components to various sectors, including manufacturing, construction, automotive, aerospace and infrastructure. The use of metal components is vital in their manufacturing processes.
An exponential growth in global population, increased urbanization and major infrastructure innovations in developing economies, especially China, INDIAAND Brazil, are expected to strengthen the demand for metals and steel. Consequently, this could strengthen the longevity of the metals industry in the coming years.
Moreover, the smooth assimilation of advanced technologies such as automation and collaborative robotics, Artificial Intelligence (AI), and the Internet of Things (IoT) has the potential to boost productivity and operational efficiency. This could also boost production levels and reduce costs, thus providing a significant boost to the metals industry.
The global metals market is expected to reach $5.27 trillion by 2028, growing at a CAGR of 4.7%. Additionally, the SPDR S&P Metals and Mining ETF (XME) has returned 10.7% over the past six months, proving investor interest in metal stocks.
With these favorable trends in mind, let's take a look at the basics of all three Industrial – Metals shares, starting with the number 3.
Stock #3: Norsk Hydro ASA (No.)
Headquartered in Oslo, Norway, NHYDY engages in power generation, bauxite mining, aluminum refining, aluminum smelting and recycling activities and providing extrusion solutions worldwide. It operates through Hydro Boksit & Alumina; Hydro Aluminum Metal; Hydro Metal Markets; Hydro Extrusions; and Hydropower segments.
NHYDY's Board of Directors proposed to distribute NOK 7 billion ($665.83 million) in shareholder distributions, representing approximately 81.5% of adjusted net income in 2023, as a combination of NOK 2.5 per share in cash dividends , 59% of adjusted net income and NOK 2 billion ($190.24 million) of share buybacks.
It pays an annual dividend of $0.51 per share, which translates to a dividend yield of 9.16% over the current share price. Its four-year average yield is 5.67%. NHYDY's dividend payouts have grown at 19% CAGR over the past five years.
NHYDY's trailing 12-month cash from operations of $2.19 billion is 387.3% higher than the industry average of $448.80 million. Its duration is 12 months Abby and leveraged FCF margins of 20.04% and 10.28% are 74.7% and 115.1% higher than the industry average of 11.47% and 4.78%, respectively.
Over the past three and five years, its EBITDA grew at CAGRs of 20.8% and 7.1%, respectively, while its free cash flow grew at 7.7% and 11.7% CAGRs over the same periods.
For the fiscal fourth quarter ended December 31, 2023, NHYDY's revenue rose 6.1% year-over-year to NOK 46.75 billion ($4.45 billion), while adjusted EBIT was NOK 1.23 billion ($117.09 million). Furthermore, its adjusted EBITDA was NOK 3.74 billion ($355.46 million).
For the same quarter, adjusted net income from continuing operations attributable to NHYDY shareholders and adjusted earnings per share from continuing operations stood at NOK 1.02 billion ($96.74 million) and NOK 0.50, respectively.
The Street expects NHYDY's revenue for the fiscal first quarter ending March 2024 to rise slightly year-over-year to $4.58 billion. Its EPS is expected to be $0.04 for the same quarter. The company beat consensus revenue estimates in each of the trailing four quarters, which is impressive.
The stock has gained 4.1% intraday to close the last trading session at $5.61.
NHYDY POWR Ratings reflect her positive perspectives. The stock has an overall rating of B, equal to Buy in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted on an optimal scale.
The stock has a grade of C for Growth, Value, Momentum, Stability and Quality. Within 33 shares Industrial – Metals industry, it ranks #11.
To view additional POWR Sentiment ratings for NHYDY, Click here.
Stock #2: Atkore Inc. (ATKR)
ATKR manufactures and sells electrical, security and infrastructure products in the United States and internationally. The company's segments include electrical; and security and infrastructure.
On January 30, ATKR's Board of Directors declared a quarterly cash dividend of $0.32 per share of common stock, payable to shareholders on March 15. This is the first quarterly dividend to be paid by the company as part of its new dividend program, previously announced in November 2023.
It pays an annual dividend of $1.28 per share, which translates to a dividend yield of 0.89% over the current share price.
ATKR's trailing 12-month cash from operations of $766.89 million is 166% higher than the industry average of $288.33 million. Its trailing 12-month EBIT and net income margins of 24.05% and 18.80% are 149.2% and 217.2% higher than the industry average of 9.65% and 5.93%, respectively.
Over the past three and five years, its EBITDA grew at CAGRs of 35.6% and 29.6%, respectively, while its free cash flow grew at 19.5% and 33.4% CAGRs over the same periods.
For the fiscal first quarter ended December 29, 2023, ATKR's net sales and gross profit were $798.48 million and $290.54 million, respectively. Additionally, its adjusted EBITDA was $213.52 million.
For the same quarter, adjusted net income and adjusted net income per share stood at $155.51 million and $4.12, respectively. Its total current liabilities stood at $505.36 million as of December 29, 2023, compared to $564.60 million as of September 30, 2023.
The Street expects ATKR's revenue for the fiscal year ending September 2024 to rise slightly year-over-year to $3.54 billion. Its EPS is expected to be $17 for the same year. The company beat EPS consensus estimates in each of the trailing four quarters.
The stock has gained 22.5% over the past nine months to close the last trading session at $144.58. During the last three months, it has gained 6.9%.
ATKR's strong prospects are reflected in its POWR ratings. The stock has an overall rating of B, equal to Buy in our proprietary rating system.
ATKR has a B grade for value and quality. It ranks #10 within the same industry.
Click here for additional POWR ratings for ATKR (Boost, Momentum, Stability and Feel).
Stock #1: Ryerson Holding Corporation (RYI)
RYI processes and distributes industrial metals in the US and internationally. It offers a line of products in carbon steel, stainless steel, alloy steel and aluminum, as well as nickel and red metals in various shapes and forms, including coils, sheets, rounds, hexagons, square and flat bars, plates , structural, and pipes.
On December 14, 2023, RYI paid its shareholders a quarterly cash dividend of $0.19 per share of common stock. It pays an annual dividend of $0.74 per share, which translates to a dividend yield of 2.11% over the current share price. Its four-year average yield is 0.90%.
On December 4, 2023, RYI acquired Hudson Tool Steel Corporation, a supplier of tool steels and high-speed, carbon and alloy steels. Hudson is headquartered in Cerritos, California, with additional locations in Loves Park, Illinois and Dover, New Hampshire. Hudson's expertise, along with RYI's existing tool steel capabilities, will enable it to better serve customers across its network.
RYI's trailing 12-month asset turnover ratio of 2.12x is 203.3% higher than the industry average of 0.70x, while its trailing 12-month FCF margin of 5.21% is 9.1% higher than the industry average. industry of 4.78%.
Over the past three and five years, its revenue grew at CAGR of 13.9% and 5.4%, respectively, while its normalized net income grew at 98.5% and 23.6% CAGR over the same periods.
For the fiscal third quarter ended September 30, 2023, RYI's net sales and gross profit stood at $1.25 billion and $249.30 million, respectively. Additionally, its adjusted EBITDA was $78.40 million.
For the same quarter, adjusted net income attributable to RYI and adjusted earnings per share stood at $35 million and $1, respectively.
The Street expects RYI revenue and EPS for the fiscal year ending December 2024 to be $4.62 billion and $3.38, respectively.
The stock has gained 22.4% over the past three months to close the last trading session at $35.08. Over the past six months, it has gained 17.8%.
RYI's solid fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
RYI has an A for value and a B for growth and quality. Within the same industry, it ranks #4.
Beyond what we've said above, we've also rated the stock for Momentum, Stability and Sentiment. Get all RYI ratings here.
What should be done next?
43-year investment veteran Steve Reitmeister has just released his market outlook for 2024, along with his trading plan and top 11 picks for the year ahead.
Shares of NHYDY were flat in premarket trading on Monday. Year-to-date, NHYDY is down -16.02%, versus a 5.09% gain in the benchmark S&P 500 over the same period.
About the Author: Neha Panjwani
From her school days, Neha nurtured a deep fascination for finance, a passion that led her to a career as an investment analyst after completing her bachelor's degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her knowledge of investment fundamentals. Neha's primary objective is to assist retail investors in discerning optimal investment opportunities by diligently evaluating the core aspects of financial instruments, with a primary focus on stocks and ETFs. Its commitment lies in empowering individuals to make informed and strategic investment decisions in the dynamic world of finance.
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