Reliance Steel (RS) Scoops Up Fox Metals and Alloys - Analyst Blog

Metal processor Reliance Steel & Aluminum Co. (RS) has purchased Houston, TX-based steel distributor – Fox Metals and Alloys, Inc. – for an undisclosed price. Fox Metals and Alloys will now operate as a fully-owned subsidiary of the company.

Fox Metals and Alloys, which has annual sales of around $50.5 million, specializes in alloy, carbon and stainless steel bar and plate products, mainly serving original equipment manufacturers (OEMs) and machine shops that make or support the production of equipment for the oil, gas and petrochemical industries.

Fox Metals and Alloys has gained a reputation for offering excellent customer service and being a reliable supplier in the Houston/Gulf Coast region when critical supplies are required on a timely basis. The entity's in-house processing services include saw cutting, plate burning and testing.

The acquisition is expected to strengthen Reliance Steel's foothold in the oil and gas space which has been an attractive and growing market for the company.

Reliance Steel continues its aggressive acquisition strategy to incite growth. The acquisition of steel and aluminum components maker – Metals USA, which the company completed in April 2013, is meaningfully contributing to its top-line growth.  Reliance Steel remains focused on acquiring businesses that support its diversification strategy.

While Reliance Steel is well placed to leverage the strong momentum across a number of end markets including automotive and aerospace, it still contends with soft steel and metals pricing environment. Moreover, the non-residential construction market – Reliance Steel's biggest end-market – continues to be a weak link.

Reliance Steel is a Zacks Rank #3 (Hold) stock.
 
Other steel and metals companies having favorable Zacks Rank are United States Steel Corp. (X), Noranda Aluminum Holding Corp. (NOR) and Nucor Corporation (NUE). All of them carry a Zacks Rank #2 (Buy).