Reliance Steel & Aluminum Co. (RS) Stock Valuation — DCF Analysis
Steel · NYSE
Current Price
$413.43
Intrinsic Value
$315.03
-31.2% margin of safety
COMPETITIVE MOAT
↑Scale and Distribution Network
RS's extensive network of service centers and vast inventory provides a significant competitive advantage. This allows for efficient delivery and broad customer reach across diverse industries.
↑Customer Relationships and Service
Long-standing relationships with a diverse customer base, coupled with value-added services like cutting and fabrication, create switching costs. This deepens customer loyalty and revenue stability.
↑Acquisition Strategy
Strategic acquisitions have expanded RS's market share and geographic presence. This inorganic growth bolsters its competitive position and diversifies its revenue streams.
INVESTMENT RISKS
↓Commodity Price Volatility
Fluctuations in steel and aluminum prices directly impact RS's profitability. Significant price drops can erode margins and reduce the value of its inventory.
↓Economic Sensitivity
Demand for steel and aluminum is closely tied to construction and manufacturing activity. Economic downturns or slowdowns in these sectors can lead to reduced sales volumes.
↓Intense Competition
The steel and aluminum distribution industry is fragmented and competitive. RS faces pressure from both larger players and smaller regional distributors.
Base case
RS base case valuation
A base case discounted cash flow model for RS estimates an intrinsic value of about $315.03 per share, against a current price of $413.43. The model assumes 3.5% annual free cash flow growth, a 10.0% discount rate, and a 30x exit multiple.
Intrinsic Value
$315.03
Margin of safety
-31.2%
Expected annual return
-5.3%
Base case assumptions: 3.5% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the RS valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Reliance Steel & Aluminum Co. respond.
Open DCF Calculator for RSCompany Overview
Reliance Steel & Aluminum Co. (RS) operates as a premier diversified metal solutions provider and a leading metal service center, serving clients across the United States, Canada, and globally. The company provides an extensive inventory of approximately 100,000 metal products, including alloys, aluminum, brass, copper, carbon steel, stainless steel, titanium, and various specialty steels. Beyond distribution, it offers comprehensive metal processing services to diverse sectors such as general manufacturing, non-residential construction, transportation, aerospace, energy, electronics and semiconductor fabrication, and heavy industries. Additionally, RS supplies non-ferrous metals and tubular building products, while also manufacturing bespoke extruded metals, fabricated components, and welded parts. As of December 31, 2021, its network comprised about 315 facilities spread across 40 U.S. states and 13 other countries. The company directly sells its offerings to original equipment manufacturers, largely catering to small machine shops and fabricators. Founded in 1939, Reliance Steel & Aluminum Co. is headquartered in Los Angeles, California.
Financial Metrics — RS Stock Valuation Data
Revenue/Share (TTM)
$287.33
FCF/Share (TTM)
$11.85
ROIC (TTM)
8.7%
ROE (TTM)
11.2%
P/FCF
34.5x
EV/EBITDA
16.4x
FCF Yield
2.90%
Debt/Equity
0.28x
Based on trailing twelve-month data, RS shows a free cash flow per share of $11.85 and a ROIC of 8.7%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 34.5x and FCF yield of 2.90% are important context metrics when evaluating RS's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of RS?
Reliance Steel & Aluminum Co. currently generates $11.85 in free cash flow per share. At the current price of $413.43, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is RS undervalued?
RS trades at a P/FCF ratio of 34.5x with a free cash flow yield of 2.90%. This P/FCF is in a moderate range. However, whether RS is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value RS stock using DCF?
To perform a DCF valuation on Reliance Steel & Aluminum Co.: (1) Start with the trailing free cash flow per share ($11.85) as the base, (2) project future FCF growth over 5-10 years based on Steel industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting RS's risk profile — with a debt-to-equity of 0.28x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to RS?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Reliance Steel & Aluminum Co., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Steel trends, then discounting those amounts to today's dollars. RS's ROIC of 8.7% shows moderate capital returns.
How does WACC affect RS stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For RS, with a debt-to-equity ratio of 0.28x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 16.4x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See RS PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Basic Materials valuationsDCF and P/E value RS with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.