Reliance Steel & Aluminum – no margin of safety

Reliance Steel & Aluminum Company (NYSE:RS) is a leading diversified metal solutions provider and the largest metals service center company in North America.

Its revenue doubled in the past 12 years, but growth was driven more by changes in selling price than tonnage. Based on the shipment tonnage, it is not a high growth company. This is despite its acquisitions.

The company operates in a cyclical industry. But it has not been able to mitigate the cyclical effects by diversifying its products, customers, and international presence.

Despite improvements in operating efficiencies and a strong financial position, the valuation of RS does not offer a margin of safety.