Ryerson's Upcoming Earnings Call: What Investors Need to Know

As Ryerson Holding Corporation (NYSE: RYI) prepares to host its fourth quarter and full-year 2024 earnings call on Friday, February 21st, investors are eager to gain insights into the company's performance and prospects. With a current stock price of $20.66 and a 12-month price target of $28, indicating a potential increase of 35.53%, investors are wondering what to expect from this earnings call. In this article, we will explore the key financial metrics, earnings trends, and primary drivers of Ryerson's revenue and earnings growth to help investors make informed decisions.



Key Financial Metrics to Focus On

1. Revenue and Revenue Growth: Ryerson's revenue is expected to decrease by 8.76% this year, reaching $4.66B, and then grow by 1.76% next year to $4.74B. Investors should pay close attention to these figures and ask about the reasons behind the decline and the expected recovery.
2. Earnings per Share (EPS) and EPS Growth: Ryerson's EPS is expected to be -$0.53 this year and $1.31 next year, indicating a significant improvement. Investors should inquire about the factors driving this change and the company's outlook for future EPS growth.
3. Return on Capital Employed (ROCE): Ryerson's ROCE has fallen from 12% over the last five years to 3.9% currently. Investors should ask management about the reasons behind this decline and their plans to improve ROCE.
4. Dividend Payout and Reinvestment: Ryerson has a low three-year median payout ratio of 8.2%, indicating that the company retains most of its profits for reinvestment. Investors should inquire about the company's dividend policy, the reinvestment strategy, and the expected returns on these investments.
5. Debt Levels and Capital Structure: Ryerson's capital structure and debt levels can impact its financial flexibility and risk profile. Investors should ask about the company's debt levels, interest expenses, and plans for managing its capital structure.
6. Analyst Ratings and Price Targets: Although there is only one analyst with a 12-month price forecast for Ryerson, their target of $28 predicts a 35.53% increase from the current stock price of $20.66. Investors should ask about the factors driving this target and the company's outlook for future stock performance.



Earnings Trends Over the Past Few Years

Ryerson's earnings trends have been volatile, with revenue and EPS growth rates fluctuating significantly from year to year. The company's revenue growth has ranged from -22.99% in 2020 to 63.71% in 2021, while EPS growth has varied from -59.84% in 2022 to 35.05% in 2021. The forward P/E ratio has also been fluctuating, with the latest data showing a ratio of 19.22, which is lower than the 5-year average of 21.57. The analyst rating for Ryerson has been consistent at "Hold" for the past year, indicating that analysts believe the stock is likely to perform similarly to the overall market.



Primary Drivers of Ryerson's Revenue and Earnings Growth

1. Market demand and end-market performance: Ryerson's revenue and earnings are driven by the demand for its products in various end-markets. The company serves industries such as oil and gas, industrial equipment, transportation equipment, heavy equipment, and electrical machinery. The performance of these industries directly impacts Ryerson's revenue and earnings growth.
2. Product mix and pricing: Ryerson processes and distributes a wide range of products, including stainless steel, aluminum, carbon steel, alloy steels, and a limited line of nickel and red metals. The company's ability to optimize its product mix and pricing strategy can significantly impact its revenue and earnings growth.
3. Geographical expansion and market penetration: Ryerson operates in multiple countries, including the United States, Canada, Mexico, and China. Expanding its geographical footprint and increasing market penetration in these regions can drive revenue and earnings growth.
4. Value-added processing and fabrication services: Ryerson offers various value-added processing and fabrication services, such as sawing, slitting, blanking, cutting to length, leveling, flame cutting, laser cutting, edge trimming, edge rolling, roll forming, tube manufacturing, polishing, shearing, forming, stamping, punching, and rolling shell plate to radius. These services can differentiate Ryerson from its competitors and drive revenue and earnings growth.
5. Efficient cost management: Ryerson's ability to manage its costs effectively, including raw material costs, operating expenses, and overhead costs, can positively impact its earnings growth. By maintaining a strong focus on cost management, Ryerson can improve its profit margins and drive earnings growth.

In conclusion, investors should pay close attention to Ryerson's upcoming earnings call, focusing on key financial metrics, earnings trends, and primary drivers of revenue and earnings growth. By doing so, investors can make informed decisions about the company's prospects and valuation. As Ryerson continues to navigate a volatile market and adapt to changing industry dynamics, investors should remain vigilant and monitor the company's performance closely.