Reliance Steel Return On Asset vs. Return On Equity

RS Stock  USD 334.18  2.72  0.81%   
Taking into consideration Reliance Steel's profitability measurements, Reliance Steel's profitability may be sliding down. It has an above-average likelihood of reporting lower numbers next quarter. Profitability indicators assess Reliance Steel's ability to earn profits and add value for shareholders. Price To Sales Ratio is likely to gain to 1.16 in 2024. Operating Cash Flow Sales Ratio is likely to gain to 0.12 in 2024. At this time, Reliance Steel's Operating Income is comparatively stable compared to the past year. Income Before Tax is likely to gain to about 1.8 B in 2024, whereas Net Income From Continuing Ops is likely to drop slightly above 724.8 M in 2024.
Current ValueLast YearChange From Last Year 10 Year Trend
Gross Profit Margin0.220.2906
Way Down
Slightly volatile
Net Profit Margin0.09470.0902
Sufficiently Up
Slightly volatile
Operating Profit Margin0.06080.1175
Way Down
Slightly volatile
Pretax Profit Margin0.120.1176
Fairly Up
Slightly volatile
Return On Assets0.130.1267
Fairly Up
Slightly volatile
Return On Equity0.10.173
Way Down
Slightly volatile
For Reliance Steel profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Reliance Steel to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well Reliance Steel Aluminum utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Reliance Steel's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Reliance Steel Aluminum over time as well as its relative position and ranking within its peers.
  
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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
22.64
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.

Reliance Steel Aluminum Return On Equity vs. Return On Asset Fundamental Analysis

Comparative valuation techniques use various fundamental indicators to help in determining Reliance Steel's current stock value. Our valuation model uses many indicators to compare Reliance Steel value to that of its competitors to determine the firm's financial worth.
Reliance Steel Aluminum is rated third in return on asset category among related companies. It is rated third in return on equity category among related companies reporting about  1.73  of Return On Equity per Return On Asset. At this time, Reliance Steel's Return On Equity is comparatively stable compared to the past year.. Comparative valuation analysis is a catch-all model that can be used if you cannot value Reliance Steel by discounting back its dividends or cash flows. This model doesn't attempt to find an intrinsic value for Reliance Steel's Stock . Still, instead, it compares the stock's price multiples to a benchmark or nearest competition to determine if the stock is relatively undervalued or overvalued. The reason why the comparable model can be used in almost all circumstances is due to the vast number of multiples that can be utilized, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. The P/E ratio is the most commonly used of these ratios because it focuses on the Reliance Steel's earnings, one of the primary drivers of an investment's value.

Reliance Return On Equity vs. Return On Asset

Return on Asset or ROA shows how effective is the management of the company in generating income from utilizing all of the assets at their disposal. It is a useful ratio to evaluate the performance of different departments of a company as well as to understand management performance over time.

Reliance Steel

Return On Asset

 = 

Net Income

Total Assets

 = 
0.1
Return on Asset measures overall efficiency of a company in generating profits from its total assets. It is expressed as the percentage of profits earned per dollar of Asset. A low ROA typically means that a company is asset-intensive and therefore will needs more money to continue generating revenue in the future.
Return on Equity or ROE tells company stockholders how effectually their money is being utilized or reinvested. It is a useful ratio when analyzing company profitability or the management effectiveness given the capital invested by the shareholders. ROE shows how efficiently a company utilizes investments to generate income.

Reliance Steel

Return On Equity

 = 

Net Income

Total Equity

 = 
0.18
For most industries, Return on Equity between 10% and 30% are considered desirable to provide dividends to owners and have funds for the future growth of the company. Investors should be very careful using ROE as the only efficiency indicator because ROE can be high if a company is heavily leveraged.

Reliance Return On Equity Comparison

Reliance Steel is currently under evaluation in return on equity category among related companies.

Reliance Steel Profitability Projections

The most important aspect of a successful company is its ability to generate a profit. For investors in Reliance Steel, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Reliance Steel will eventually generate negative long term returns. The profitability progress is the general direction of Reliance Steel's change in net profit over the period of time. It can combine multiple indicators of Reliance Steel, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Last ReportedProjected for 2024
Accumulated Other Comprehensive Income-76.7 M-72.9 M
Operating Income1.7 B1.8 B
Income Before Tax1.7 B1.8 B
Total Other Income Expense Net1.2 M1.3 M
Net Income1.3 B1.4 B
Income Tax Expense400.6 M420.6 M
Net Income Applicable To Common Shares2.1 B2.2 B
Net Income From Continuing Ops1.3 B724.8 M
Non Operating Income Net Other-2.8 M-2.7 M
Interest Income35.2 M49.9 M
Net Interest Income-103.3 M-108.5 M
Change To Netincome107.3 M112.7 M
Net Income Per E B T 0.77  0.54 

Reliance Profitability Driver Comparison

Profitability drivers are factors that can directly affect your investment outlook on Reliance Steel. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Reliance Steel position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Reliance Steel's important profitability drivers and their relationship over time.

Use Reliance Steel in pair-trading

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Reliance Steel position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Reliance Steel will appreciate offsetting losses from the drop in the long position's value.

Reliance Steel Pair Trading

Reliance Steel Aluminum Pair Trading Analysis

The ability to find closely correlated positions to Reliance Steel could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Reliance Steel when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Reliance Steel - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Reliance Steel Aluminum to buy it.
The correlation of Reliance Steel is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Reliance Steel moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Reliance Steel Aluminum moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Reliance Steel can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

Use Investing Themes to Complement your Reliance Steel position

In addition to having Reliance Steel in your portfolios, you can quickly add positions using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.

Did You Try This Idea?

Run Adviser Favorites Thematic Idea Now

Adviser Favorites
Adviser Favorites Theme
Financial advisors frequently recommend that individuals diversify their investment portfolios with a mix of different types of stocks. These can include blue-chip stocks, growth stocks, and dividend stocks. The Adviser Favorites theme has 17 constituents at this time.
You can either use a buy-and-hold strategy to lock in the entire theme or actively trade it to take advantage of the short-term price volatility of individual constituents. Macroaxis can help you discover thousands of investment opportunities in different asset classes. In addition, you can partner with us for reliable portfolio optimization as you plan to utilize Adviser Favorites Theme or any other thematic opportunities.
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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:
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You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Complementary Tools for Reliance Stock analysis

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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To fully project Reliance Steel's future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of Reliance Steel Aluminum at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include Reliance Steel's income statement, its balance sheet, and the statement of cash flows.
Potential Reliance Steel investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although Reliance Steel investors may work on each financial statement separately, they are all related. The changes in Reliance Steel's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Reliance Steel's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.