RS Intrinsic Value

RS

Reliance Steel & Aluminum Co. – Iron and Steel Mills and Ferroalloy Manufacturing

reliance steel & aluminum co. (nyse:rs) headquartered in los angeles, california, is the largest metals service center company in north america. through a network of more than 300 locations in 39 states and 12 countries outside of the united states, the company provides value-added metals processing services and distributes a full line of over 100,000 metal products. these products include galvanized, hot-rolled and cold-finished steel, stainless steel, aluminum, brass, copper, titanium and alloy steel sold to more than 125,000 customers in a broad range of industries. some of these metals service centers provide processing services for specialty metals only. in the mid-1970's, the company began to establish specialty metals centers stocked with inventories of selected metals and equipped with automated materials handling and precision cutting equipment. beginning in the early 1990's, owners of successful service center companies started to sell these companies as they were reaching re

Analysis Results

Intrinsic Value	$826.74
Latest Price	$263.21
Relative Value	68% undervalued

Share results:

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Cash Flow (Billions)

Analysis Parameters

New Ticker

Analysis Details

Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 16.2%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 8.0%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 16.2%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year	Future flow (billion)	Present value (billion)
2023	2.11	1.95
2024	2.45	2.1
2025	2.84	2.26
2026	3.3	2.43
2027	3.84	2.61

Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 65.5 billion. This corresponds to a present value of 41.4 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 11.4 billion. Adding in the terminal value gives a total present value of 52.7 billion.

There are presently 63.8 million outstanding shares, so the intrinsic value per share is 826.74.

Financial Statements

The following data was to determine the past cash flows.

Current Assets	4,886,600,000
Current Cash	1,173,400,000
Current Liabilities	1,375,300,000
Current Debt	508,200,000
Non-Cash Working Capital (NCWC)	2,846,100,000
Change in NCWC	46,500,000
EBIT	2,506,900,000
Tax Provision	586,200,000
Depreciation and Amortization	240,200,000
Capital Expenditure	-341,800,000
Unlevered Free Cash Flow	1,847,148,592

Current Assets	4,160,100,000
Current Cash	300,500,000
Current Liabilities	1,065,000,000
Current Debt	5,000,000
Non-Cash Working Capital (NCWC)	2,799,600,000
Change in NCWC	977,300,000
EBIT	1,953,600,000
Tax Provision	465,700,000
Depreciation and Amortization	230,200,000
Capital Expenditure	-236,600,000
Unlevered Free Cash Flow	2,441,364,999

Current Assets	3,112,800,000
Current Cash	683,500,000
Current Liabilities	613,000,000
Current Debt	6,000,000
Non-Cash Working Capital (NCWC)	1,822,300,000
Change in NCWC	-403,200,000
EBIT	673,800,000
Tax Provision	105,800,000
Depreciation and Amortization	227,300,000
Capital Expenditure	-172,000,000
Unlevered Free Cash Flow	176,824,215

Current Assets	3,010,200,000
Current Cash	174,300,000
Current Liabilities	675,300,000
Current Debt	64,900,000
Non-Cash Working Capital (NCWC)	2,225,500,000
Change in NCWC	-297,400,000
EBIT	1,014,700,000
Tax Provision	223,200,000
Depreciation and Amortization	219,300,000
Capital Expenditure	-242,200,000
Unlevered Free Cash Flow	450,688,561

Current Assets	3,285,000,000
Current Cash	128,200,000
Current Liabilities	699,100,000
Current Debt	65,200,000
Non-Cash Working Capital (NCWC)	2,522,900,000
Change in NCWC	237,700,000
EBIT	974,500,000
Tax Provision	208,800,000
Depreciation and Amortization	215,200,000
Capital Expenditure	-239,900,000
Unlevered Free Cash Flow	948,285,798

Current Assets	3,051,300,000
Current Cash	154,400,000
Current Liabilities	703,700,000
Current Debt	92,000,000
Non-Cash Working Capital (NCWC)	2,285,200,000
Change in NCWC	293,000,000
EBIT	666,600,000
Tax Provision	-37,200,000
Depreciation and Amortization	218,400,000
Capital Expenditure	-161,600,000
Unlevered Free Cash Flow	1,016,400,000

Current Assets	2,688,500,000
Current Cash	122,800,000
Current Liabilities	656,000,000
Current Debt	82,500,000
Non-Cash Working Capital (NCWC)	1,992,200,000
Change in NCWC	31,200,000
EBIT	565,700,000
Tax Provision	120,100,000
Depreciation and Amortization	222,000,000
Capital Expenditure	-154,900,000
Unlevered Free Cash Flow	505,704,170

Current Assets	2,554,200,000
Current Cash	104,300,000
Current Liabilities	989,700,000
Current Debt	500,800,000
Non-Cash Working Capital (NCWC)	1,961,000,000
Change in NCWC	-485,000,000
EBIT	599,900,000
Tax Provision	142,500,000
Depreciation and Amortization	218,500,000
Capital Expenditure	-172,200,000
Unlevered Free Cash Flow	-25,165,271

Current Assets	3,121,100,000
Current Cash	106,200,000
Current Liabilities	662,800,000
Current Debt	93,900,000
Non-Cash Working Capital (NCWC)	2,446,000,000
Change in NCWC	327,600,000
EBIT	619,600,000
Tax Provision	170,000,000
Depreciation and Amortization	213,800,000
Capital Expenditure	-190,400,000
Unlevered Free Cash Flow	777,790,188

Current Assets	2,738,900,000
Current Cash	83,600,000
Current Liabilities	573,400,000
Current Debt	36,500,000
Non-Cash Working Capital (NCWC)	2,118,400,000
Change in NCWC	433,200,000
EBIT	569,100,000
Tax Provision	153,600,000
Depreciation and Amortization	192,400,000
Capital Expenditure	-168,000,000
Unlevered Free Cash Flow	843,940,727

Current Assets	2,277,400,000
Current Cash	97,600,000
Current Liabilities	578,200,000
Current Debt	83,600,000
Non-Cash Working Capital (NCWC)	1,685,200,000
Change in NCWC	59,300,000
EBIT	661,400,000
Tax Provision	201,100,000
Depreciation and Amortization	151,500,000
Capital Expenditure	-214,000,000
Unlevered Free Cash Flow	439,940,170

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