Oil prices rise on talk of Russia sanctions; bouncing off recent lows
Investing.com - KeyBanc has reiterated an Overweight rating and $32.00 price target on Worthington Steel Inc (NYSE:WS), currently valued at $1.3 billion, following the company’s fourth-quarter earnings that significantly exceeded analyst expectations. According to InvestingPro analysis, the stock appears undervalued at current levels, with a Financial Health Score rated as GOOD.
The steel producer reported adjusted earnings per share of $1.06 for the quarter ending May 2025, well above KeyBanc’s estimate of $0.82. Worthington Steel’s adjusted EBITDA reached approximately $87 million, surpassing the firm’s projection of around $74 million due to higher volumes, stronger metal spreads, and better gross profit margins. Trading at an EV/EBITDA multiple of 6.9x and P/E ratio of 11.1x, the company maintains moderate debt levels, as highlighted in InvestingPro’s comprehensive analysis report, which includes additional valuable insights available to subscribers.
The company achieved core profitability of $64 per ton in EBITDA, excluding inventory holding gains of $24.2 million ($0.48 per share), outperforming KeyBanc’s estimate of $54 per ton and the previous quarter’s $49 per ton. This performance approached the firm’s near-term expectations of $70-$75 per ton despite ongoing challenges in automotive, agriculture, and construction end markets. While InvestingPro data indicates weak gross profit margins as a concern, the company has demonstrated strong cash flows that sufficiently cover interest payments.
Total (EPA:TTEF) volumes for the quarter reached 982,000 tons compared to KeyBanc’s estimate of 961,000 tons, with direct tons showing particular strength against projections while tolling tons aligned with expectations.
Worthington Steel generated positive free cash flow of $8 million, contrasting with KeyBanc’s projected burn of $32 million, attributed to stronger cash income despite capital expenditures of $46 million exceeding the estimated $40 million.
In other recent news, Worthington Steel reported fourth-quarter earnings that surpassed analyst expectations. The company posted adjusted earnings per share of $1.05, significantly higher than the $0.69 consensus estimate. Revenue for the quarter reached $832.9 million, exceeding the projected $725 million. Despite a 9% year-over-year decrease in net sales due to lower average selling prices and toll volumes, Worthington Steel benefited from improved direct spreads and reduced SG&A expenses. The company generated $8.4 million in free cash flow for the quarter, a notable improvement from the negative $9.2 million recorded in the same period last year. Worthington Steel concluded the period with $38 million in cash and $151.5 million in total debt. For fiscal 2025, the company reported an adjusted EBITDA of $215.1 million on net sales of $3.09 billion. Additionally, Worthington Steel declared a quarterly dividend of $0.16 per share, payable on September 26 to shareholders of record as of September 12.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.