Although the supply chain issues have hampered the growth of the industrial sector, strong demand for goods has kept it buoyed. Production at U.S. factories increased more than expected last month, with total industrial production increasing by 0.6%. Moreover, capacity utilization for the manufacturing sector increased half a percentage point to 79.8%, rising above its long-run average. Overall capacity use for the industrial sector rose from 79.9% in June to 80.3%.
Additionally, acceleration in digital technologies to boost operational efficiencies, remaking of supply chains, and rigorous sustainability practices are expected to help boost industrial production and capacity utilization, fostering continued growth.
Ryerson Holding Corporation (RYI)
RYI processes and distributes industrial metals in the United States, Canada, Mexico, and China. It offers a line of products in carbon steel, stainless steel, alloy steel, aluminum, nickel, and red metals.
On June 1, RYI announced the acquisition of Ford Tool Steels, a tool steel processor based out of St. Louis, Missouri. FTS’s sawing and machining capabilities are aligned with those of Southern Tool Steel, a member of RYI, and thus, this strategic acquisition is expected to recognize synergies between the two brands and enhance RYI’s growth and customer experiences.
In May, the company announced its investment in FreeFORM Technologies, an additive manufacturing and engineering company. This is expected to mark RYI’s strategic exposure to additive manufacturing. “It is an important step forward, allowing us to explore synergies, new opportunities, and additional value-added capabilities with our customers as we look towards the emerging present and future of the metals industry,” said Chief Operations Officer Mike Burbach.
RYI’s revenues increased 22.9% year-over-year to $1.74 billion in the fiscal second quarter of 2022. Its net income improved 74% year-over-year to $196.40 million over the period, while its adjusted EBITDA and adjusted EPS increased 13.6% and 328.2% from its year-ago values to $224.20 million and $5.31, respectively.
Analysts expect RYI’s EPS for the fiscal year ending December 2022 to come in at $12.88, indicating an increase of 72.7% year-over-year. Also, the company’s revenue is expected to grow 10.4% year-over-year to $6.27 billion in the same period.
RYI’s shares have gained 34.5% over the past year to close the last trading session at $29.89. The stock has gained 21.6% in the past six months.
RYI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
RYI also has an A grade in Value and a B in Growth, Quality, and Sentiment. Out of the 35 stocks in the B-rated Industrial – Metals industry, RYI is ranked #2.
In addition to the POWR Rating grades I’ve just highlighted, you can see the RYI’s ratings for Stability and Momentum here.
Tennant Company (TNC)
TNC designs, manufactures, and markets floor cleaning equipment in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
For the fiscal quarter ended June 30, 2022, TNC’s net sales increased marginally year-over-year to $280.20 million. Its net income grew 69.4% from the year-ago value to $16.60 million, while operating income for the quarter stood at $22.80 million. Moreover, its net income per share was $0.89, up 74.5% from the prior-year quarter.
Street expects TNC’s revenue in the quarter ending September 2022 to come in at $286.90 million, indicating an increase of 5.5% year-over-year. Also, the company’s revenue is expected to grow 3.9% year-over-year to $1.13 billion in the ongoing fiscal year. The company also surpassed the consensus EPS estimates in three of the trailing four quarters.
TNC has gained 10.1% over the past three months to close the last trading session at $65.92.
TNC’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our POWR Ratings system.
The company also has a B grade in Value, Stability, and Quality. It is ranked #16 of 79 stocks in the B-rated Industrial – Machinery industry.
To get TNC’s ratings for Growth, Momentum, and Sentiment, click here.
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RYI shares were trading at $31.59 per share on Tuesday afternoon, up $1.70 (+5.69%). Year-to-date, RYI has gained 22.24%, versus a -12.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
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