Morningstar

Morningstar, Inc.

Equity Bottom-Up

We anticipated that Schnitzer Steel Industries would suffer sharply lower profits in fiscal 2019 after enjoying cyclical peak market conditions in 2018. Accordingly, we forecast $88 million of adjusted operating income for 2019, a 40% decline from $147 million last year. Regardless, even though profits have declined year to date, the company continues to perform fairly well versus historical standards, and third-quarter results were solid. Having updated our valuation model, we are not changing…

One of the largest metal recycling companies in the United States, Schnitzer Steel Industries collects, processes, and ships large volumes of ferrous and nonferrous scrap metal. Ferrous shipments account for more than 90% of the company’s scrap tonnage. However, because nonferrous scrap, which includes aluminum, copper, nickel, brass, titanium, and metal alloys, commands significantly higher selling prices, ferrous shipments typically generate only about two thirds of total recycling…

Although Schnitzer Steel Industries' second-quarter recycling profits were steady, we've trimmed our near-term profit outlook for the company's steelmaking operations. Having updated our valuation model, we are lowering our fair value estimate to $19 per share from $20. Our no-moat rating is intact
Our adjusted EBITDA forecast falls to $140 million from $145 million in fiscal 2019 and to $123 million from $130 million in 2020. Although metal margins remain elevated versus historical levels,…

United States

Schnitzer Steel Industries, Inc. operates a steel scrap recycling business in the western United States.  The Company supplies ferrous scrap to export and domestic steel producers through its scrap collection, processing, and deep water facilities.  Schnitzer also operates collection and processing facilities, as well as manages other facilities through joint ventures.

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