I'll just go ahead and say it -- Worthington Industries (NYSE:WOR) isn't my idea of a perfect investment. The company's main business is processing steel. That means it prepares steel for customers after buying it from other manufacturers, and there's the first problem: The company is subject to unpredictable steel prices. On top of that, most steel companies require frequent investments in new processes and equipment to stay competitive. Those factors make it very difficult for a company like Worthington to beat the market over the long haul.

Even so, Worthington has made a respectable effort to create shareholder value. The company recently paid its 150th quarterly dividend and announced two weeks ago that it may elect to purchase up to 11% of its outstanding shares. As for cash flow, management keeps a keen eye on capital expenditures and has spent less than the recorded amounts of depreciation and amortization for five years running.

The company has also been operating in a very favorable business environment lately. While yesterday's fourth-quarter report seems to signal a slowdown, the company is still posting solid earnings. After adding back non-recurring expenses, net income for the quarter came in at $0.46 per diluted share, compared with a record $0.84 in the fourth quarter of 2004. Earnings for the full year were $2.10 per diluted share, compared with $1.35 in fiscal 2004 -- again, after non-recurring expenses are added back in. For more comparison information, check out Worthington's Q4 and full-year numbers breakdown.

The stock's current P/E of just beyond 8 is within range of peers such as Commercial Metals' (NYSE:CMC) 6.5, Steel Technologies' (NASDAQ:STTX) 4, and Nucor's (NYSE:NUE) 5.7. In comparison, the S&P 500 boasts a P/E of 21.

Still, it's clear that Mr. Market isn't counting on big profits from steel in the near future. In yesterday's report, Worthington is already showing flattening sales growth and a declining gross margin in comparison with previous quarters. With that in mind, investors would do well to use caution before buying at the current price. The market can be very efficient in predicting these cyclical downswings.

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Fool contributor Matt Thurmond has no financial interest in any company mentioned in this article -- meaning he doesn't own stock and isn't shorting shares.