On Wednesday, the Canadian benchmark tumbled while U.S. markets were mixed.
In the U.S., the Dow Jones Industrial Average advanced 0.22 per cent, the S&P 500 index fell 0.10 per cent, and the Nasdaq composite index lost 0.41 per cent.
In Canada, the S&P/TSX composite index plunged 210 points or 1.36 per cent. There were just 33 securities in the TSX Index that advanced, 213 securities declined in value, and four stocks closed the day unchanged. Only two sectors closed in mildly positive territory while nine sectors declined led by a downdraft in resource stocks. The price of oil dropped 3.7 per cent, breaking below $45 (U.S.) a barrel and remained under pressure this morning.
Russel Metals pays its shareholders a quarterly dividend of 38 cents per share, or $1.52 on a yearly basis. This equates to an annualized dividend yield of 6.2 per cent. Management has maintained its dividend at this level since mid-2014.
There are six analysts covering this company, and all six analysts have buy recommendations.
The firms providing research coverage are as follows in alphabetical order: EVA Dimensions, GMP, Raymond James, RBC Capital Markets, Scotia Capital, and TD Securities.
The consensus earnings before interest, taxes, depreciation and amortization (EBITDA) estimates are $196-million in 2017, rising 12 per cent to $220-million in 2018. The Street is forecasting earnings per share of $1.60 in 2017, climbing 15 per cent to $1.84 in 2018.
Earnings expectations have been steadily increasing. To illustrate, four months ago, the consensus EBITDA estimates for 2017 and 2018 were $176-million and $202-million, respectively. The Street was forecasting earnings per share of $1.37 in 2017 and $1.69 in 2018.
According to Bloomberg, the stock is trading at a price-to-earnings (P/E) multiple of 13.3 times the 2018 consensus estimate, slightly below its five-year historical average of 13.7 times. On an enterprise value-to-EBITDA basis, the stock is trading at a multiple of 7.8 times the 2018 consensus estimate, just below its five-year historical average of 8.2 times.
The average one-year target price is $30.55, implying the stock price may have 25 per cent upside potential. Individual target prices provided by five analysts are as follows in numerical order: $28.75, $30, two at $31, and $32.
Several analysts have recently revised their recommendations – all higher. Earlier this week, Michael Tupholme from TD Securities upgraded the stock to a ‘buy’ from a ‘hold’ and maintained his $30 price target. Last month, Sara O’Brien, the analyst from RBC Capital Markets, raised her target price to $32, the high on the Street, from $31. Frederic Bastien from Raymond James lifted his target price by $1 to $31.
Insider transaction activity
There have been two recent purchases in the market by insiders, both relatively small transactions. On June 6, William O’Reilly, who sits on the board of directors, bought 400 shares at an average price per share of $23.77. Prior to that, on May 15, James Dinning, director and chair of the board, purchased 1,500 shares at an average price per share of $25.89.
Year to date, the share price is down 4 per cent, steadily drifting lower but not on large volume.
The stock price has initial overhead resistance around $25, near its 50-day moving average (at $25.85) as well as its 200-day moving average (at $24.92). After that, there is a ceiling of resistance around $29, just below the $30 mark.
Looking at downside support, shares of Russel Metals have solid technical support around $20.
The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company’s dividend policy, analysts’ recommendations, financial forecasts, and provides a brief technical analysis for a security to provide readers with more information.
If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.
Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indices that have a minimum market capitalization of $200-million.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.
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- Russel Metals Inc$25.890.00(0.00%)
- Updated July 19 4:00 PM EDT. Delayed by at least 15 minutes.