Value
7.7/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 0.3 |
| P/S | 10.0 |
| EV/EBITDA | 5.6 |
| Fwd P/E | 8.7 |
| PEG | 10.0 |
- ▸Forward P/E: 12.8x
- ▸PEG: 0.02
- ▸Attractively valued
WS · Why this verdict
Why Worthington Steel (WS) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.8/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Automotive-related customers account for approximately 52% of total revenues, meaning the company's financial performance is tightly coupled to the health of domestic auto production and any slowdown in vehicle assembly rates would directly and materially impact steel volumes. Bear case | Automotive-related revenue concentration decreases to below 45% over 12 months as the company diversifies its customer base toward other industrial end markets. | →Stable |
| CounterLong-term supply relationships with major automotive original equipment manufacturers can provide revenue stability through production cycles, as switching steel processors mid-cycle is operationally costly for vehicle assemblers. | ||
The analyst price target at $44.04 is only 5.6% above the current price and the asymmetry ratio is deeply negative at negative 1.67, indicating the risk-reward is unfavorable with more potential loss than gain at the current entry level. Warnings | Analyst price targets are revised upward by more than 20% over 12 months following earnings improvement, restoring a meaningful positive upside opportunity. | →Stable |
| CounterA forward price-to-earnings ratio near 15.6x and a price-to-sales ratio near the attractively valued range suggests some embedded value that limits downside even with current earnings challenges. | ||
Worthington Steel's quality score of 3.2 is below the minimum threshold of 4.0, driven by critically low free cash flow as a percentage of revenue at 1% and thin operating margins, indicating the business is not generating sufficient cash to sustain its earnings. Warnings | Business quality improves over 12 months with free cash flow rising to at least 5% of revenue as the steel processing cycle recovers. | →Stable |
| CounterSteel processors are inherently low-margin, capital-intensive businesses; the quality score may systematically understate strategic value from customer relationships and processing capabilities. | ||
Worthington Steel has missed earnings estimates in 2 of the last 4 quarters, including a significant negative 43% surprise in March 2026, suggesting earnings execution is inconsistent and the business is struggling to meet Street forecasts in the current environment. Earnings | Earnings delivery improves over the next 12 months with at least 3 of the next 4 quarters showing positive earnings surprises. | →Stable |
| CounterThe two positive quarters showed strong beats of 7% and 27%, indicating the company can deliver upside; the miss pattern may reflect lumpy order timing rather than a structural deterioration. | ||
Automotive-related customers account for approximately 52% of total revenues, meaning the company's financial performance is tightly coupled to the health of domestic auto production and any slowdown in vehicle assembly rates would directly and materially impact steel volumes.
→StableBear case
- Expectation
- Automotive-related revenue concentration decreases to below 45% over 12 months as the company diversifies its customer base toward other industrial end markets.
CounterLong-term supply relationships with major automotive original equipment manufacturers can provide revenue stability through production cycles, as switching steel processors mid-cycle is operationally costly for vehicle assemblers.
The analyst price target at $44.04 is only 5.6% above the current price and the asymmetry ratio is deeply negative at negative 1.67, indicating the risk-reward is unfavorable with more potential loss than gain at the current entry level.
→StableWarnings
- Expectation
- Analyst price targets are revised upward by more than 20% over 12 months following earnings improvement, restoring a meaningful positive upside opportunity.
CounterA forward price-to-earnings ratio near 15.6x and a price-to-sales ratio near the attractively valued range suggests some embedded value that limits downside even with current earnings challenges.
Worthington Steel's quality score of 3.2 is below the minimum threshold of 4.0, driven by critically low free cash flow as a percentage of revenue at 1% and thin operating margins, indicating the business is not generating sufficient cash to sustain its earnings.
→StableWarnings
- Expectation
- Business quality improves over 12 months with free cash flow rising to at least 5% of revenue as the steel processing cycle recovers.
CounterSteel processors are inherently low-margin, capital-intensive businesses; the quality score may systematically understate strategic value from customer relationships and processing capabilities.
Worthington Steel has missed earnings estimates in 2 of the last 4 quarters, including a significant negative 43% surprise in March 2026, suggesting earnings execution is inconsistent and the business is struggling to meet Street forecasts in the current environment.
→StableEarnings
- Expectation
- Earnings delivery improves over the next 12 months with at least 3 of the next 4 quarters showing positive earnings surprises.
CounterThe two positive quarters showed strong beats of 7% and 27%, indicating the company can deliver upside; the miss pattern may reflect lumpy order timing rather than a structural deterioration.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Worthington Steel is a value-priced steel processor with a Piotroski score of 7/9 and moderate peer ranking, but the business quality is below the minimum floor at 3.2, earnings have been mixed with 2 recent misses, and heavy automotive customer concentration leaves the company exposed to cyclical demand risk.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.5 |
| ROA | 3.2 |
| Gross margin | 0.0 |
| Op margin | 0.7 |
| Net margin | 1.8 |
| Current ratio | 5.5 |
| FCF quality | 0.1 |
| Moat | 6.4 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: 1% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
5.5/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 5.5 |
Momentum
1.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 0.0 |
- ▸Capitulation risk (RSI 22, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+3.5%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.6 |
| Price target | 9.2 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (1.0) — signal dampened
- ▸Analyst upside: 40%
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $1,431,977 (0.090% of mkt cap)
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.1 |
| quality rank | 5.0 |
| growth rank | 5.8 |
Technical
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.0 |
| support resistance | 9.0 |
| 52w position | 3.5 |
Risk (lower is worse)
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.0 |
| days to cover | 3.5 |
| volatility | 0.0 |
| put call | 8.3 |
| implied vol | 0.0 |
| beta | 2.7 |
| debt equity | 9.0 |
- ▸High IV: 83%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 1.0 |
| dividend safety | 6.0 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 162.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:87d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.2<4.5
- ASYMMETRY:1.4<1.5@spot
Warning (0)
none
Reward-to-Risk
1.36
Upside
+19.1%
Downside
14.1%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($1.6B) below institutional reach
SuitabilityAggressive — Beta 2.20>1.3, MCap $1.6B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 7.7 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:1.2<4.5.
The strongest dimensions are Value at 7.7, Technical at 7.2, and Sentiment at 6.6; the weakest are Momentum at 1.2, Quality at 3.2, and Peer rank at 3.5. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 1.36 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Quality Floor Failure
Trip ifQuality score remains below 3.5 for more than 3 consecutive quarters, confirming the low-cash-flow pattern is structural.
- P2Automotive Customer Concentration
Trip ifAutomotive customer revenues decline by more than 15% year-over-year in any reported quarter, signaling sector demand has weakened materially.
- P3Earnings Miss Pattern
Trip ifEPS surprise falls below -20% in the upcoming earnings report or in at least 2 of the next 4 quarters.
- P4Target Exceeded Negative Asymmetry
Trip ifStock price drops below $38.77, more than 7% below the current $41.69, reaching the defined stop-loss level.