On Tuesday, KeyBanc Capital Markets adjusted its outlook on Worthington Steel Inc (NYSE:WS), increasing the stock price target to $40 from the previous $39 while maintaining an Overweight rating on the shares.
The adjustment comes after KeyBanc's analyst conducted a tour of the company's Columbus Steel operations and held discussions with Worthington Steel's top executives, CEO Geoff Gilmore and CFO Tim Adams.
The firm cites improved near-term value-added spreads and the increased potential for accretive mergers and acquisitions (M&A) as the primary reasons for the revised earnings per share (EPS) estimates and price target. KeyBanc's updated analysis reflects confidence in the company's current financial performance and potential for future growth.
The analyst's comments following the visit and management meetings were optimistic, noting the company's favorable position. "Following our tour of WS's Columbus Steel operations and meeting with management, including CEO Geoff Gilmore and CFO Tim Adams, we are modestly raising our EPS estimates and price target to $40 (from $39)," the analyst stated.
The continuation of the Overweight rating indicates KeyBanc's positive stance on Worthington Steel's stock, suggesting that the firm believes the stock could outperform the average total return of the stocks in the analyst's coverage universe over the next 12 to 18 months.
KeyBanc maintains that a longer-term price range for Worthington Steel's stock is between $40 and $50, contingent upon successful execution of the company's growth initiatives.
Investors and market watchers will be keeping an eye on Worthington Steel as it pursues its growth strategies in the coming months, with the updated price target offering a new benchmark for the company's performance.
InvestingPro Insights
As KeyBanc Capital Markets updates its outlook on Worthington Steel Inc, real-time data from InvestingPro provides additional context to the company's current financial standing. With a market capitalization of $1.78 billion and a P/E ratio of 9.32, which adjusts to 9.06 based on last twelve months as of Q3 2024, Worthington Steel presents an intriguing valuation.
The company's gross profit margin stands at 13.49%, reflecting the challenges in maintaining higher margins that the InvestingPro Tips highlight.
On the performance front, Worthington Steel has shown a robust price total return of 45.28% over the last six months, aligning with the positive sentiment expressed by KeyBanc's analyst. This momentum is further evidenced by a strong return over the last month of 16.9%.
According to InvestingPro Tips, the company's cash flows can sufficiently cover interest payments, and it operates with a moderate level of debt, which may reassure investors concerned about financial stability.
For those interested in deeper analysis and more InvestingPro Tips, there are additional insights available for Worthington Steel on InvestingPro. Subscribers can unlock these tips and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With more tips on hand, investors can make more informed decisions based on comprehensive data and expert analysis.
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