CIBC World Upgrades Reliance Steel & Aluminum

From Standard & Poor's Equity Research

CIBC World upgraded Reliance Steel & Aluminum (RS) to sector outperform from sector perform, after the company Thursday posted quarterly results.

The company posted $2.65 second quarter earnings per share (EPS) and forecast $1.15-$1.20 third quarter EPS (adjusted for a 2-for-1 split.)

Analyst Michael Willemse says second quarter results topped guidance, while management cited strong demand in all markets, particularly aerospace (the hottest market), energy, and non-residential construction. He notes pricing in all products rose sequentially. He says the stock fell sharply yesterday, even though second quarter results were strong and the outlook for the third quarter reasonable. Despite concerns related to global growth in 2007, he finds Reliance shares attractively valued. He sees $4.60 2006 EPS and $4.30 in 2007.

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