Olympic Steel Earnings Preview

Investors braced for a bumpy ride ahead of Olympic Steel's (Nasdaq: ZEUS  ) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Thursday, Feb. 23. Olympic Steel is focused on the direct sale and distribution of large volumes of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel products.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back Olympic Steel as a buy. But with 60% of analysts rating it a buy, Olympic Steel is still below the mean analyst rating of its nearest eight competitors, which average 61.3% buys. Analysts like Olympic Steel better than competitor L. B. Foster Company overall. One out of three analysts rate L.B. Foster a buy compared to three of five for Olympic Steel. While analysts still rate the stock a moderate buy, they are a little more optimistic about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $315.5 million in revenue this quarter. That would represent a rise of 46.6% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.27 per share. Estimates range from $0.18 to $0.30.

What our community says:
CAPS All-Stars are solidly behind the stock, with 94.9% awarding it an "outperform" rating. The community at large concurs with the All-Stars, with 90.1% granting it a rating of "outperform." Despite the majority sentiment in favor of Olympic Steel, the stock has a middling CAPS rating of three out of five stars.

Management:
The company increased its gross margin by 7.9 percentage points in the last quarter. Revenue rose 66.6% while cost of sales rose 51.8% to $281.1 million from a year earlier.

Now let's get some insight into how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The company's net margin has been increasing year over year for the last four quarters. Net margin reflects what percentage of revenue becomes profit. Here are Olympic Steel's reported margins for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

19.4%

16.4%

22.3%

11.2%

Operating Margin

2.7%

4.9%

5.5%

(0.7%)

Net Margin

1.8%

2.8%

3.3%

(0.7%)

For all our Olympic Steel-specific analysis, including earnings and beyond, add Olympic Steel to My Watchlist.

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Earnings estimates provided by Zacks.

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