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Why Reliance could be an interesting play in the metal industry
Reliance Steel has a business model that doesn’t involve high leverage. Its business model is also very flexible. These factors help RS post stable margins across business cycles.
Reliance Steel and Aluminum (RS) grew tremendously over the years. This has been possible due to organic growth and a set of acquisitions to enhance shareholder value.
Analysts use the inventory turnover ratio to measure a company’s operational performance. Inventory turnover is sales divided by the average inventory held over the year.
Steel imports in the U.S. increased sharply this year. Steel exports from China reached a record high of 7.2 million tonnes in September. China is the largest steel exporter.
Metals USA was a major acquisition that RS completed last year. Metals USA’s margins are a bit lower than Reliance Steel’s profit margins.
Reliance Steel posted an earnings per share (or EPS) of $ 1.21. This is almost 1% lower than its EPS in 3Q13. The results were below Wall Street analysts’ expectations.
RS focuses on small customers. It has more than 125,000 customers. This makes RS achieve excellent customer diversification. It executes more than 22,000 customer orders per day.
Reliance Steel was established as a distributor of steel reinforcing bars in California. It was established in 1939. The company grew organically and through a focused acquisition strategy.
iPhone and Mac have become Apple’s (AAPL) growth products. Mac was also outstanding in fiscal 4Q14. However, iPad continued to disappoint. Its sales declined by 13% in the last quarter.
In addition to this massive buyback, Apple also paid $2.8 billion in dividends. As a result, Apple spent ~$20 billion in the last quarter as part of the capital return program.
Apple Pay is an attractive feature on Apple devices—in terms of ease of use, security, and privacy. As a result, it will help Apple sell more devices. It was released for mass use on October 20.
The e-commerce market growth is partly responsible for the slowdown in the physical retail market. However, this hasn’t impacted the growth in Apple’s (AAPL) retail stores.
App Store is one of Apple’s (AAPL) fastest growing businesses. For reporting purposes, Apple combines the iTunes business with App Store under the category iTunes, Software, and Services.
At a major event in September, Apple (AAPL) launched two main products—iPhone 6 and Apple Watch. Apple Watch is the first new product that Apple has launched in four years.
Apple (AAPL) is the fifth ranked player in the PC market. Mac’s unit shipments were estimated at approximately five million as of 3Q14.
Historically, China has been an important market for Apple (AAPL). Apple gets ~16% of its revenues from Greater China. It’s the company’s third largest market.
An important factor driving iPhone revenues was the increase in iPhone’s ASP. iPhone’s ASP of $603 in fiscal 4Q14 increased by $42 sequentially and $26 on a YoY basis.
Apple sold 39.3 million iPhones in fiscal 4Q14. It had a 16% year-over-year (or YoY) growth rate. The demand for new iPhones has been staggering.
Apple (AAPL) released the iPad Air 2 and iPad Mini 3 a few days ago. The iPad Mini 3 was a disappointment. Except the introduction of Touch ID, there were no changes to its specifications.
A few months ago, Apple and IBM (IBM) forged a partnership. IBM’s “big data” and analytics capabilities would help Apple analyze the data collected from Apple’s devices.