JPMorgan downgraded Reliance Steel & Aluminum Co. to Neutral from Overweight and reduced its price objective to $330 from $340 following the company’s fourth-quarter financial report.
The firm highlighted that adjusted earnings per share landed at the low end of expectations after stripping out unfavorable year-end LIFO and income tax adjustments totaling $0.25. JPMorgan attributed the earnings miss primarily to higher-than-anticipated selling, general and administrative expenses measured on a per-ton basis, which rose 1.2% year-over-year, and to persistent margin pressure stemming from aluminum price volatility.
Reliance reported several mixed operational outcomes. The company expanded its market share in fiscal 2025, taking its estimated share to roughly 17%, up 200 basis points year-over-year and growing faster than industry shipments by more than 700 basis points. Tons shipped increased 5.8% year-over-year, ahead of the firm’s guidance range of 3.5% to 5.5%. On the margin side, adjusted gross margins on a FIFO basis eased by 50 basis points quarter-over-quarter to 28.5%, missing management’s guidance for flat-to-slightly higher margins.
Cash generation was solid in the period. Reliance produced $203 million in free cash flow, an increase of 12% sequentially, and used $200 million of that to repurchase shares. The board approved a quarterly dividend rise of roughly 4% to $1.25 per share, which implies a yield of about 1.5%.
According to platform data cited in the company briefings, the dividend raise represents the 15th straight year of increases for the $16.9 billion metals distributor. That same data set currently flags the stock as trading above its Fair Value estimate, with analysts maintaining a Hold consensus. The company’s Pro Research Report is listed among the available analyst research on the platform.
On guidance and forward-looking commentary, JPMorgan noted that the company’s first-quarter EPS outlook of $4.50 to $4.70 was consistent with the pre-release Bloomberg consensus, but that buy-side expectations were closer to $5.00. JPMorgan stated that current valuation appears to bake in elevated first-half pricing that could soften in the second half of the year. The bank added that tariff-driven aluminum margin pressure may continue, particularly if demand from semiconductor and commercial aerospace end markets remains lagging.
Separately, Reliance’s reported fourth-quarter results for 2025 topped analyst forecasts on both the bottom and top lines. The company posted EPS of $2.96 versus a consensus estimate of $2.80, and revenue of $3.5 billion versus the expected $3.43 billion.
Despite the beat in quarterly results, BMO Capital lowered its rating on Reliance Steel & Aluminum from Outperform to Market Perform, trimming its price target to $320 from $340. BMO cited a more moderate margin recovery than previously anticipated and a lack of meaningful near-term catalysts as the rationale for its action.
Collectively, the analyst revisions reflect a tension between the company’s operational strengths - share gains, shipment growth and improving free cash flow - and ongoing margin headwinds tied to aluminum price swings, tariff impacts and higher SG&A per ton.