Why Schnitzer Steel Industries' Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Schnitzer Steel Industries (Nasdaq: SCHN  ) are down 20% today as the company gave a disappointing market outlook after the market closed yesterday.

So what: Management said it saw volumes falling in its steel manufacturing business and ferrous volumes unchanged from the second quarter. Higher costs for raw materials and freight will compress margins and put pressure on earnings as the economy struggles to recover.

Now what: Shares have been crushed over the past year, and today they crashed through the previous 52-week low. But the stock now has a 2.3% dividend yield and trades at 8.4 time trailing earnings. Estimates have fallen hard, but the company is still expected to be highly profitable this year, and it has beaten earnings estimates the past three quarters. I'd like to see the stock settle down from its current tanking before buying, but it's beginning to look like a decent value, even in a weak market.

Interested in more info on Schnitzer Steel Industries? Add it to your Watchlist.

Fool contributor Travis Hoium has no position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 1890203, ~/Articles/ArticleHandler.aspx, 7/25/2014 2:46:29 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.