Earnings Preview: Schnitzer Steel Industries

| About: Schnitzer Steel (SCHN)

Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) engages in recycling ferrous and nonferrous scrap metals, and used and salvaged vehicles; and manufacturing finished steel products. The company operates through three segments: Metals Recycling Business (MRB), Auto Parts Business (APB), and Steel Manufacturing Business (SMB).

It is scheduled to report its results on June 28, 2012, before the market opens.

Technical Overview

Key Metrics

  • Market Cap: 659.12M
  • 52-week trading range: 22.78 - 59.06
  • Trailing P/E: 7.72
  • Forward P/E: 8.87
  • Price/Sales: 0.18
  • Price/Book: 0.59
  • PEG Ratio: 1.66
  • Total Debt: 413.56M
  • Annual dividend yield: 1.00%
  • Return on Equity: 8.34%
  • Return on Assets: 4.95%

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last three quarters. In the last quarter it reported $0.35 EPS, beating analyst estimates of $0.33.

The consensus EPS is $0.25 based on 8 analysts' estimates, down from $1.17 a year ago. Revenue estimates are $876.03M, down from $981.06M a year ago. The median target price by analysts for the stock is $29.00.

Average recommendation: Hold

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On May 18, 2012, Auriga reiterated Hold rating for the company.
  • On May 1, 2012, KeyBanc Capital Mkts initiated Hold rating for the company.

Latest Developments

  • On May 17, 2012, Schnitzer Steel Industries, Inc. announced its market outlook for its third quarter of fiscal 2012. During the quarter, the global demand for recycled metals has remained soft and the tepid US economic recovery, together with lower than normal spring scrap flows, has contributed to tighter supplies. Margins have compressed from the second quarter, as a slight increase in average gross ferrous selling prices has been more than offset by higher costs of both raw materials and freight.
  • On March 16, 2012, Schnitzer Steel Industries, Inc. announced that for the second quarter of 2012, it expects diluted earnings per share (EPS) to be approximately $0.28-$0.35.


Schnitzer Steel Industries Inc. operates in Steel & Iron industry. The company could be compared to Commercial Metals Company (NYSE:CMC), Industrial Services of America, Inc. (NASDAQ:IDSA), Metalico Inc. (NYSEMKT:MEA), and Nucor Corporation (NYSE:NUE). Below is the table comparison of the most important ratios between these companies and the industry.

Below is the chart comparison with the stock price changes as a percentage for the selected companies and S&P 500 index for the last one year period.

SCHN Chart

SCHN data by YCharts

Competitors' Latest Development

  • On June 21, 2012, Nucor Corporation announced that it has completed the acquisition of the membership interest of Skyline Steel LLC and subsidiaries for the purchase price of approximately $605 million.
  • On June 13, 2012, Nucor Corporation announced that for the second quarter of 2012, it expects results to be in the range of $0.35 to $0.40 per diluted share.
  • On June 4, 2012, Commercial Metals Company announced the completion of the sale of Croatian Pipe Mill and wholly owned subsidiary, CMC Sisak, d.o.o. (CMC Sisak), pursuant to a definitive purchase agreement whereby CMC sold all of the outstanding shares of CMC Sisak to the Danieli Group - Steel Making Division by the Danieli holding company, Industrielle Beteiligung SA (Danieli).
  • On May 18, 2012, ArcelorMittal announced the sale of its steel foundation distribution business in NAFTA, namely Skyline Steel and Astralloy (Skyline Steel) to Nucor Corporation (Nucor) for a total consideration of approximately $605 million on a debt free and cash free basis (and subject to customary closing adjustments).
  • On May 17, 2012, Industrial Services of America, Inc. announcedthat Mr. Orson Oliver has been elected Chairman of its Board of Directors. Harry Kletter, ISA`s founder and Chief Executive Officer, was elected Vice Chairman of the Board of Directors.
  • On April 19, 2012, Nucor Corporation announced that for the second quarter of 2012, it currently expect to see only a modest improvement in earnings.
  • On February 15, 2012, Nucor Corporation announced that the Board of Directors has declared the regular quarterly cash dividend of $0.365 per share on Nucor's common stock. This cash dividend is payable on May 11, 2012 to stockholders of record on March 30, 2012.
  • On January 26, 2012, Nucor Corporation announced that it expect earnings in the first quarter of 2012 to be improved from fourth quarter 2011 levels, after adjusting for one-time benefits received in the fourth quarter.
  • On January 5, 2012, Nucor Corporation announced that it will exit the business of fabricating light gauge steel framing and therefore will close its Nuconsteel division. Nuconsteel has operations in Denton, Texas, and Dallas, Georgia.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.