Reliance Steel Bonds

RS Stock  USD 334.18  2.72  0.81%   
Reliance Steel Aluminum holds a debt-to-equity ratio of 0.272. At this time, Reliance Steel's Short Term Debt is comparatively stable compared to the past year. Long Term Debt is likely to gain to about 1.3 B in 2024, whereas Net Debt is likely to drop slightly above 282.2 M in 2024. Reliance Steel's financial risk is the risk to Reliance Steel stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).

Asset vs Debt

Equity vs Debt

Reliance Steel's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Reliance Steel's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Reliance Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Reliance Steel's stakeholders.

Reliance Steel Quarterly Net Debt

297.1 Million

For most companies, including Reliance Steel, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Reliance Steel Aluminum the most critical issue when dealing with liquidity needs is whether the current assets are properly aligned with its current liabilities. If not, management will need to obtain alternative financing to ensure that there are always enough cash equivalents on the balance sheet in reserve to pay for obligations.
Price Book
2.4642
Book Value
134.838
Operating Margin
0.0974
Profit Margin
0.0902
Return On Assets
0.1045
Given that Reliance Steel's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Reliance Steel is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Reliance Steel to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Reliance Steel is said to be less leveraged. If creditors hold a majority of Reliance Steel's assets, the Company is said to be highly leveraged.
At this time, Reliance Steel's Short Term Debt is comparatively stable compared to the past year. Long Term Debt is likely to gain to about 1.3 B in 2024, whereas Net Debt is likely to drop slightly above 282.2 M in 2024.
  
Check out the analysis of Reliance Steel Fundamentals Over Time.

Reliance Steel Bond Ratings

Reliance Steel Aluminum bond ratings play a critical role in determining how much Reliance Steel have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Reliance Steel's borrowing costs.
Piotroski F Score
5  Healthy
Beneish M Score

Reliance Steel Aluminum Debt to Cash Allocation

As Reliance Steel Aluminum follows its natural business cycle, the capital allocation decisions will not magically go away. Reliance Steel's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors. Many companies eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
The company reports 1.38 B of total liabilities with total debt to equity ratio (D/E) of 0.27, which may suggest the company is not taking enough advantage from financial leverage. Reliance Steel Aluminum has a current ratio of 3.19, indicating that it is in good position to pay out its debt commitments in time. Debt can assist Reliance Steel until it has trouble settling it off, either with new capital or with free cash flow. So, Reliance Steel's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Reliance Steel Aluminum sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Reliance to invest in growth at high rates of return. When we think about Reliance Steel's use of debt, we should always consider it together with cash and equity.

Reliance Steel Total Assets Over Time

Reliance Steel Assets Financed by Debt

Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Reliance Steel's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Reliance Steel, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Reliance Steel debt ratio should be compared their industry average or other competing firms.

Reliance Steel Corporate Bonds Issued

Reliance Steel issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. Reliance Steel Aluminum uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt. Most Reliance bonds can be classified according to their maturity, which is the date when Reliance Steel Aluminum has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.

Reliance Short Long Term Debt Total

Short Long Term Debt Total

1.17 Billion

At this time, Reliance Steel's Short and Long Term Debt Total is comparatively stable compared to the past year.

Understaning Reliance Steel Use of Financial Leverage

Reliance Steel financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Reliance Steel's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Reliance Steel assets, the company is considered highly leveraged. Understanding the composition and structure of overall Reliance Steel debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to Reliance Steel's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Reliance Steel's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Last ReportedProjected for 2024
Short and Long Term Debt Total1.4 B1.2 B
Net Debt297.1 M282.2 M
Short Term Debt56.5 M82.6 M
Long Term Debt1.1 B1.3 B
Long Term Debt Total1.3 B1.8 B
Short and Long Term Debt300 K285 K
Long Term Debt To Capitalization 0.13  0.12 
Total Debt To Capitalization 0.13  0.13 
Debt Equity Ratio 0.16  0.15 
Debt Ratio 0.11  0.11 
Cash Flow To Debt Ratio 1.39  1.46 
Please read more on our technical analysis page.

Reliance Steel Investors Sentiment

The influence of Reliance Steel's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in Reliance. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock market does not have solid backing from leading economists and market statisticians.
Investor biases related to Reliance Steel's public news can be used to forecast risks associated with an investment in Reliance. The trend in average sentiment can be used to explain how an investor holding Reliance can time the market purely based on public headlines and social activities around Reliance Steel Aluminum. Please note that most equities that are difficult to arbitrage are affected by market sentiment the most.
Reliance Steel's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Reliance Steel's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average Reliance Steel's news discussions. The higher the estimated score, the more favorable is the investor's outlook on Reliance Steel.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards Reliance Steel in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, Reliance Steel's short interest history, or implied volatility extrapolated from Reliance Steel options trading.

Currently Active Assets on Macroaxis

When determining whether Reliance Steel Aluminum is a strong investment it is important to analyze Reliance Steel's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Reliance Steel's future performance. For an informed investment choice regarding Reliance Stock, refer to the following important reports:
Check out the analysis of Reliance Steel Fundamentals Over Time.
You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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When running Reliance Steel's price analysis, check to measure Reliance Steel's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Reliance Steel is operating at the current time. Most of Reliance Steel's value examination focuses on studying past and present price action to predict the probability of Reliance Steel's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Reliance Steel's price. Additionally, you may evaluate how the addition of Reliance Steel to your portfolios can decrease your overall portfolio volatility.
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Is Reliance Steel's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Reliance Steel. If investors know Reliance will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Reliance Steel listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
(0.20)
Dividend Share
4
Earnings Share
22.63
Revenue Per Share
253.839
Quarterly Revenue Growth
(0.08)
The market value of Reliance Steel Aluminum is measured differently than its book value, which is the value of Reliance that is recorded on the company's balance sheet. Investors also form their own opinion of Reliance Steel's value that differs from its market value or its book value, called intrinsic value, which is Reliance Steel's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Reliance Steel's market value can be influenced by many factors that don't directly affect Reliance Steel's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Reliance Steel's value and its price as these two are different measures arrived at by different means. Investors typically determine if Reliance Steel is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Reliance Steel's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

What is Financial Leverage?

Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.

Leverage and Capital Costs

The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.

Benefits of Financial Leverage

Leverage provides the following benefits for companies:
  • Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
  • It provides a variety of financing sources by which the firm can achieve its target earnings.
  • Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.