During the lightning round of the September 8 episode, a caller mentioned that they think that Reliance, Inc. (NYSE:RS) is “slated to do well.” Mad Money host Jim Cramer replied:
You’re right; RS is terrific. I prefer Nucor, but you’re absolutely right to bring me RS. It’s a very, very good company.
Cramer made a similar comparison on April 27, calling Reliance “a very fine company” and saying he liked it “right after Nucor.” He also said Reliance was “not outrageously expensive” after a sharp move higher.
Reliance and Nucor Post Stronger Second-Quarter Results
Reliance, Inc. reported second-quarter revenue of $4.63 billion, up 26.5% year over year. Tons sold increased 10.8% year-over-year, while average selling price per ton increased 14.5%. Non-GAAP diluted EPS rose 41.5% to $6.27. The U.S. border-wall project contributed 5.2 percentage points to tons-sold growth and $0.41 to second-quarter EPS. At the September 9 Jefferies Global Industrials Conference, CEO Karla Lewis said, “The mills are very bullish.” COO Stephen Koch said there were “many more strong markets than weak markets,” pointing to strength tied to electrification and data centers. Lewis separately highlighted nonresidential construction, automotive toll processing and general manufacturing.
On the other hand, Nucor Corporation (NYSE:NUE) reported second-quarter net earnings attributable to shareholders of $1.16 billion, or $5.04 per diluted share, compared with $603 million, or $2.60, a year earlier. Adjusted net earnings per diluted share were $4.84. The company expects higher consolidated earnings in the third quarter, with higher realized prices and stable steel-mill volumes, while raw materials earnings are expected to decline due to lower margins.
Bear Case Centers on Pricing and Margins
Reliance, Inc. expects third-quarter tons sold, excluding the border-wall project, to decline 2% to 4% sequentially, while average selling price per ton is expected to increase 1% to 3%. The company said carbon-steel prices have benefited from tight supply and solid demand. CEO Lewis also addressed the effect of potential tariff changes, saying, “Generally prices probably would come down” if tariffs were reduced, while adding that prices “would still be at healthy levels.” Management also discussed the possibility of increased imports and changes in trade flows.
Nucor Corporation’s third-quarter outlook similarly depends on higher realized steel prices across its major steel products and stable mill volumes. The company expects lower earnings in its raw materials segment because of lower margins.
Hedge Fund Holdings Increased at Both Companies
According to Insider Monkey, which tracks more than 1,000 hedge funds, 41 hedge funds held RS in the second quarter, up from 37 in the first quarter. NUE had 62 holders, up from 59. Short interest remains relatively low for both steel companies. Reliance’s short % of float stood at 1.90%, while Nucor’s was 1.56%-1.58%. Cramer continues to rank Nucor Corporation ahead of Reliance, Inc., while describing RS as a “very, very good company.” The latest results show higher sales, shipments, and earnings at Reliance, while Nucor reported higher steel-mill pricing and volumes and expects higher consolidated earnings in the third quarter.
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