Hot-rolled coil steel pricing spreads: the differential between input costs and selling prices drives gross margins in processing operations
Regional construction and manufacturing activity in Texas: drives demand for flat-rolled steel products from key end markets
Energy sector capex in Permian Basin and Gulf Coast: impacts tubular products demand for drilling and midstream infrastructure
Working capital management: inventory levels and cash conversion cycles significantly impact cash flow generation given thin margins
high - Steel processing is highly cyclical, directly tied to industrial production, construction activity, and manufacturing output. With exposure to Texas construction markets and energy infrastructure, the company faces amplified cyclicality from oil & gas capex cycles. The -13.9% revenue decline and -64.9% net income drop reflect typical steel service center performance during demand slowdowns. Regional economic activity in Texas (construction permits, manufacturing PMI) drives 60-70% of demand volatility.
Moderate sensitivity through two channels: (1) Higher rates reduce construction and manufacturing activity, dampening steel demand from key end markets. (2) Working capital financing costs increase, though minimal debt (0.03 D/E) limits direct balance sheet impact. The company's high current ratio (3.59x) suggests excess working capital that becomes more expensive to carry in rising rate environments. Valuation multiples compress as investors rotate away from low-margin cyclicals.
Commoditization and margin compression: steel processing offers minimal differentiation, with customers easily switching suppliers based on price, limiting pricing power and keeping margins structurally low in the 8-12% gross margin range
Domestic steel mill consolidation: as integrated mills (Cleveland-Cliffs, Nucor, Steel Dynamics) expand downstream capabilities, they may bypass service centers and sell directly to large customers, disintermediating processors
Import competition and trade policy volatility: Section 232 tariffs and trade policy changes create unpredictable cost structures and competitive dynamics with foreign steel processors
value - The stock trades at 0.2x sales and 0.9x book value, attracting deep value investors betting on cyclical recovery and mean reversion in steel processing margins. Negative cash flow and -7.0% FCF yield deter growth and income investors. The 11.9% one-year return suggests some speculative interest in steel cycle timing, but 12.0% ROE with deteriorating fundamentals (-64.9% net income decline) limits institutional interest. Typical holders are likely contrarian value funds and retail investors seeking distressed cyclical exposure.
No analyst coverage available for this stock.
1 signal unavailable — limited data for this stock
Trend
+8.6% vs SMA 50 · +4.8% vs SMA 200
Momentum
Strong accumulation on above-average volume. Buyers are absorbing supply aggressively — any positive catalyst could trigger a rapid covering move.
Based on volume distribution analysis. Direct short interest data (short float %, days to cover) is not available in current data sources.
Dividend per payment — last 8 periods
INSTITUTIONAL OWNERSHIP
FRD News
About
For over 50 years Friedman Industries has helped its customers succeed by consistently providing high quality steel products at highly competitive prices with quick delivery. Founded in 1965 and headquartered in Longview, Texas, Friedman operates in two divisions: the Flat Roll Division and the Tubular Division.
| Symbol | Price | Day % | Mkt Cap↓ | P/E | Rev Grw | Margin | ELO |
|---|---|---|---|---|---|---|---|
FRD◀ | $20.60 | -1.44% | $147M | 9.2 | -1387.9% | 136.9% | 1500 |
| $506.11 | -1.08% | $234.1B | 33.0 | +297.2% | 2029.7% | 1508 | |
| $109.06 | -6.25% | $116.4B | — | — | — | 1504 | |
| $63.01 | -4.73% | $90.6B | 33.3 | +112.4% | 856.2% | 1514 | |
| $300.10 | -2.94% | $74.0B | — | — | — | 1475 | |
| $247.62 | -0.51% | $69.7B | 33.2 | +215.9% | 1290.7% | 1477 | |
| $295.38 | +0.00% | $65.8B | 31.2 | -52.3% | — | 1501 | |
| Sector avg | — | -2.42% | — | 28.0 | -163.0% | 1078.4% | 1497 |