Third-quarter profit of $5.26 a share and lagged steel contracts support about $19 of 2027 earnings. At 13.5 times that is a $255 stock, a market-like return from $244.
Key points
- $5.26 third-quarter 2026 diluted earnings, just under the $5.34, $5.38 guide on late hedges.
- 80% of flat-rolled sales use contracts that lag the coil market by about two months.
- $26 million aluminum operating loss; management now expects positive EBIT only from first-quarter 2027.
The call
The $244 stock needs about $18.50 of 2027 earnings at thirteen times, a mid-cycle multiple for an electric-arc mill. Nine-month 2026 profit is already $11.73 a share, so the price assumes the steel spread holds and aluminum stops leaking.
I model $18.90 of 2027 earnings at 13.5 times. Contracted steel prices and a fabrication backlog into mid-2027 support that run rate; the aluminum mill is a 2027 story, not a 2026 one.
Diluted EPS by quarter ($)GAAP from filings and Q3 2026 release; E = my estimates. As of Oct 20, 2026.
Valuation
| Item | Figure |
|---|
| 2026E diluted EPS | $16.60 |
| 2027E diluted EPS | $18.90 |
| Target multiple | 13.5 times |
| 12-month target | $255 |
| Dividend (last twelve months) | $2.09 a share |
Thirteen and a half times is a through-cycle multiple for a mill that still earns more than peers at 92% utilization. Upside if aluminum turns a quarter early is a few dollars; downside if coil prices reverse is larger, so the rating is hold, not buy.
Risks
- Hot-rolled coil could fall from $1,310 a tonne and squeeze lagged contracts by spring 2027.
- Aluminum yields or auto qualification could slip past mid-2027, keeping the mill in the red.
- Import relief or extra domestic capacity could cut utilization below 90%.
What would change my mind
A fourth-quarter print below $4.20 a share or aluminum still losing more than $20 million in first-quarter 2027.