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1. Company Snapshot

1.a. Company Description

Russel Metals Inc.operates as a metal distribution company in North America.The company operates through three segments: Metals Service Centers, Energy Products, and Steel Distributors.


The Metal Service Centers segment sells plates, flat rolled carbon, stainless steel, aluminum, and other non-ferrous specialty metal products, as well as general line steel products, such as plates, structural shapes, bars, sheets, pipes, tubing, and hollow structural steel tubing.It also offers services, including fiber tube and flat laser processing; multi-dimensional press braking and rolling; shearing, slitting, and cutting to length; laser, oxy-fuel, and plasma cutting; stretcher and traditional leveling; beam drilling, notching, coping, and tee-splitting; saw cutting; edge trimming; and cambering.This segment serves customers in industries, such as machinery and equipment manufacturing, construction, ship building, and natural resources.


The Energy Products segment distributes flanges, valves, fittings, and tubular goods primarily to energy industry.The Steel Distributors segment operates as a steel distributor for steel service centers and large equipment manufactures.Russel Metals Inc.


was incorporated in 1929 and is headquartered in Mississauga, Canada.

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1.b. Last Insights on RUS

Russel Metals Inc.'s recent performance was driven by strong cash flow and strategic progress, despite margin pressures from lower steel prices and acquisition costs. The company's acquisition of Tampa Bay Steel for $79.5 million, closed on December 4, 2024, is expected to enhance its value-added processing and non-ferrous products capabilities. Additionally, the company's estimated fair value is CA$53.94, based on 2 Stage Free Cash Flow to Equity, indicating a potential upside. Furthermore, RBC upgraded the company to Outperform on November 26, 2024, citing its strong cash flow and strategic progress.

1.c. Company Highlights

2. Russel Metals' Q3 2025 Earnings: A Strong Performance Amidst Market Volatility

Russel Metals reported a robust financial performance in Q3 2025, with revenues of around $1.2 billion, EBITDA of $75 million, and earnings per share (EPS) of $0.63, beating analyst estimates of $0.534. The company's revenues for the first 9 months of 2025 increased by 10% compared to the same period in 2024, driven by its capital deployment initiatives, including two acquisitions made last year. The annualized return on invested capital (ROIC) for 2025 year-to-date stood at 16%, exceeding the company's stated target of over 15%.

Publication Date: Dec -02

📋 Highlights
  • Revenue & EBITDA Growth:: Q3 2025 revenue up 10%, first 9 months EBITDA increased 13% YoY, with Q3 EBITDA at $75M and EPS at $0.63.
  • Capital Deployment:: $15M Q3 capex below multiyear run rate, capital reserves over $1.7B, and $38M returned to shareholders via buybacks and dividends.
  • Return on Invested Capital:: Year-to-date ROI at 16%, exceeding the 15%+ target, with a net debt/EBITDA ratio below 1x and BBB- credit rating.
  • Market & Operational Stability:: Solid shipment volumes despite price volatility, $25/ton gross margin reduction expected, and cost normalization anticipated in Q1 2026.
  • Strategic M&A Focus:: Kloeckner acquisition to drive $100M+ cost synergies over 180 days, with $106M average NCIB activity and $96M annual dividend run rate.

Operational Highlights

The company's operational performance was marked by solid shipment levels despite volatile price movements in the sheet and plate markets. Market conditions saw a strong upward swing in early 2025 due to tariffs, but prices have since stabilized. The company expects a typical seasonal volume decline in Q4. Operating costs were higher in Q3 due to a one-time charge related to the Delta closure and higher operating costs in Western Canada, but are expected to decrease in Q4.

Capital Allocation and M&A

Russel Metals has a balanced approach to capital allocation, prioritizing reinvestment in the business, acquisitions, and returning capital to shareholders. The company returned $38 million to shareholders in Q3 through share buybacks and dividends. The Kloeckner acquisition is a significant project that is expected to bring cost synergies and revenue growth. The company is being highly selective in its M&A pursuits and is focused on integrating Kloeckner in the near term.

Valuation and Outlook

With a P/E Ratio of 13.87 and an EV/EBITDA ratio of 7.74, the market appears to have priced in a reasonable growth trajectory for Russel Metals. Analysts estimate revenue growth of 16.4% for next year, which is a positive indicator. The company's strong balance sheet, with a net debt-to-EBITDA ratio of 0.85, provides flexibility for future M&A opportunities or share buybacks. Given its investment-grade credit rating and strong ROIC, Russel Metals is well-positioned to navigate the industry dynamics.

Industry Dynamics and Demand

The company is seeing a bullish trend in Q1 driven by data centers, solar, and nuclear projects, although the ag sector is struggling due to crop prices. The company is watching for a potential whipsaw effect in 2026. The energy field stores segment has shown more predictable and steady performance following changes made by the company. The highly fragmented market, particularly in the US, presents opportunities for M&A, and Russel Metals is well-positioned to capitalize on this trend.

3. NewsRoom

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3 Promising Undervalued Small Caps In Global With Recent Insider Action

Nov -28

Source:

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Russel Metals Maintained at Buy at Stifel Canada Following Q3 Results; Price Target Lowered to C$49.00

Nov -10

Source:

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RUSSEL METALS ANNOUNCES 2025 THIRD QUARTER RESULTS

Nov -05

Source:

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.46%)

6. Segments

Metals Service Centers

Expected Growth: 4.5%

Russel Metals Inc.'s Metals Service Centers segment growth of 4.5% is driven by increasing demand from construction and infrastructure projects, rising industrial production, and growing need for value-added services such as fabrication and machining. Additionally, strategic acquisitions and expansion into new markets also contribute to the segment's growth.

Energy Field Stores

Expected Growth: 4.2%

Russel Metals Inc.'s Energy Field Stores segment growth of 4.2% is driven by increasing demand for oil and gas infrastructure, rising energy prices, and growing investments in renewable energy sources. Additionally, the company's strategic expansion into new markets and its focus on providing value-added services to customers have contributed to the segment's growth.

Steel Distributors

Expected Growth: 4.8%

Russel Metals Inc.'s steel distributors segment growth of 4.8% is driven by increasing demand from construction and infrastructure projects, rising oil and gas activities, and a strong recovery in the automotive sector. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to the growth.

Other

Expected Growth: 4.0%

Russel Metals Inc.'s 4.0% growth in 'Other' segment is driven by increasing demand for specialty steel products, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on operational efficiency and cost savings initiatives have contributed to the growth.

7. Detailed Products

Carbon Steel Products

Russel Metals Inc. offers a wide range of carbon steel products, including flat-rolled, tubular, and plate products, used in construction, transportation, and industrial applications.

Aluminum Products

The company provides aluminum products, including sheets, plates, and extrusions, used in aerospace, transportation, and construction industries.

Stainless Steel Products

Russel Metals Inc. offers stainless steel products, including sheets, plates, and tubing, used in food processing, chemical processing, and medical equipment manufacturing.

Specialty Metals

The company provides specialty metals, including titanium, nickel, and copper alloys, used in aerospace, chemical processing, and electrical applications.

Tubing and Pipe Products

Russel Metals Inc. offers tubing and pipe products, including seamless and welded tubes, used in oil and gas, construction, and industrial applications.

Processing and Fabrication Services

The company provides processing and fabrication services, including cutting, machining, and assembly, for various industries.

8. Russel Metals Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Russel Metals Inc. operates in a industry where substitutes are available, but they are not a significant threat to the company's business. The company's products are specialized and have a high barrier to entry, making it difficult for substitutes to gain traction.

Bargaining Power Of Customers

Russel Metals Inc. has a diverse customer base, which reduces the bargaining power of individual customers. The company's products are also customized to meet the specific needs of its customers, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

Russel Metals Inc. relies on a few large suppliers for its raw materials, which gives these suppliers some bargaining power. However, the company's long-term contracts and relationships with its suppliers help to mitigate this risk.

Threat Of New Entrants

The metal processing industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to enter the market and compete with established players like Russel Metals Inc.

Intensity Of Rivalry

The metal processing industry is highly competitive, with several established players competing for market share. Russel Metals Inc. faces intense competition from its rivals, which puts pressure on its prices and margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 20.49%
Debt Cost 8.91%
Equity Weight 79.51%
Equity Cost 11.75%
WACC 11.17%
Leverage 25.76%

11. Quality Control: Russel Metals Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Russel Metals

A-Score: 6.6/10

Value: 6.9

Growth: 5.0

Quality: 5.2

Yield: 8.0

Momentum: 5.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Global Industrial

A-Score: 5.5/10

Value: 4.0

Growth: 4.9

Quality: 6.9

Yield: 7.0

Momentum: 6.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
ADENTRA

A-Score: 5.4/10

Value: 7.8

Growth: 7.1

Quality: 4.0

Yield: 4.0

Momentum: 2.5

Volatility: 7.0

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DXP Enterprises

A-Score: 4.9/10

Value: 3.7

Growth: 7.1

Quality: 4.5

Yield: 0.0

Momentum: 10.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Titan Machinery

A-Score: 4.4/10

Value: 7.8

Growth: 4.4

Quality: 2.8

Yield: 0.0

Momentum: 6.5

Volatility: 4.7

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Transcat

A-Score: 3.1/10

Value: 2.7

Growth: 6.2

Quality: 5.3

Yield: 0.0

Momentum: 0.0

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

40.88$

Current Price

40.88$

Potential

-0.00%

Expected Cash-Flows