Russel Metals’ strategic acquisition of Tampa Bay Steel Corp significantly strengthens its presence in central Florida while expanding its capabilities in value-added processing and non-ferrous products. These markets are critical for diversifying revenue streams and improving profitability margins. Additionally, the company’s energy field stores segment stands to benefit from policies favouring energy independence. This in turn drives demand for specialized products including drill pipes and tubular goods.
Meanwhile, the stock trades at just 10.2 times the company’s forward earnings forecast—and yields a high 4.4%.
RUSSEL METALS INC. (Toronto symbol RUS; www.russelmetals.com) is a #1 Power Buy for your 2025 investing.
The firm is a leading metals distributor in North America, with more than 30,000 end customers.
The company carries on business in three segments: metals service centres, energy field stores and steel distributors. Its network of metals service centres carries an extensive line of metal products in a wide range of sizes, shapes and specifications, including carbon hot rolled and cold finished steel, pipe and tubular products, stainless steel, aluminum and other non-ferrous specialty metals. Its energy field stores carry a specialized product line focused on the needs of energy industry customers. Its steel distributors act as master distributors selling steel in large volumes to other steel service centres and large equipment manufacturers mainly on an “as is” basis.
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In August 2024, Russel completed its acquisition of seven service-centre locations from Samuel, Son & Co. for $225 million. Russel acquired Samuel’s metals service centres in Winnipeg, Calgary, Nisku (Alberta), Langley (BC), Surrey, Buffalo (New York) and Pittsburgh. Samuel retained its location in Delta (B.C.) and will conduct an orderly shut-down of that facility.
Meantime, Russel recently acquired Tampa Bay Steel Corp. for $79.5 million U.S. That firm operates in the central Florida region, and its business includes significant value-added processing and non-ferrous products. Tampa Bay Steel has annual revenue of about $115 million U.S.
Dividend Stocks: Russel Metals’ shares trade at an attractive valuation amid a positive outlook
In the three months ended December 31, 2024, revenue rose 1.9%, to $1.04 billion from $1.02 billion a year earlier. Overall earnings in the latest quarter were $26.9 million, or $0.47 a share. That’s a 43.0% decrease from $47.2 million, or $0.78, a year earlier. The drop came from higher costs.
President Trump’s policies were favourable for the steel industry during his first term. They were supportive of steel prices in the U.S. and globally and boosted demand for steel due to reshoring and manufacturing.
Further, the new administration’s likely focus on energy independence will benefit the company’s energy field stores segment with sales of drill pipes and so on.
Therefore, the long-term outlook for Russel is positive, and the company’s shares now trade at just 10.2 times the 2025 forecast earnings of $3.77 a share.
With the June 2024 payment, Russel raised your quarterly dividend by 5.0%, to $0.42 a share from $0.40. The new annual rate of $1.68 yields an attractive 4.4%.
Recommendation in Power Growth Investor: Russel Metals Inc. is a buy.
