Worthington Steel, Inc. (WS) Stock Analysis
Worthington Steel, Inc.
▾ What's in the 61/100 risk score? (higher = riskier)
Contributions (weight × component score) sum to the total. This near-term score now includes fundamental health (leverage, FCF trend, DCF applicability). It excludes the the Altman Z score, whose retained-earnings input this filer does not report separately, which relies on a proxied (estimated) input. See the Financial Health section for the full balance-sheet read.
How to read WS (cyclical commodity producer)
A miner or energy producer earns whatever the commodity price is, so a single DCF swings with the cycle. Judge it against peers and where you think the commodity cycle is heading.
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EV/Sales peer comparison ↓
How the price compares to similar producers is more meaningful than a through-cycle DCF.
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Interactive calculator (test cycle assumptions) ↓
Flex the growth/discount inputs to see how sensitive the value is to where we are in the cycle.
Is now a good time to buy WS?
Macro: Neutral / mid-cycleWS trades at $37.87 vs an estimated intrinsic value of $19.24 — a +96.8% above our mid-cycle reference value. Low confidence: commodity prices and normalized margins dominate this result. WS is a cyclical commodity producer (Steel), so a single growth-DCF is the wrong tool — its profits rise and fall with the commodity price. We value it off normalized, mid-cycle cash flow, which is why the modeled growth reads near 0%: we deliberately don't extrapolate growth from a possibly-elevated base. A premium here usually just means today's price sits above mid-cycle worth — common when the commodity is near a cycle high (near a trough the same model would read "cheap"). On its own that's not a sell signal — judge it against its peers and where you think the cycle is heading.
Not investment advice. The model can be wrong. Verify the assumptions in the sections below and consider consulting a licensed advisor for significant decisions.
What cash-flow improvement must the market believe? Reverse DCF — Instead of asking "what is this stock worth?", asks "what growth rate is the current market price already assuming?"
Why it matters: It crystallizes the bull thesis as a single number you can argue with. If the market expects 40% growth for 10 years and you do not believe that, the stock is overvalued.
Reference: 10–15% = sustainable for strong companies · 20–25% = exceptional · 30%+ = historically very rare
Reverse DCF treats today's price as correct and solves for the cash-flow path that justifies it. For a cyclical, read the result as the annual improvement in through-cycle free cash flow the price requires — which could come from higher realized commodity prices, margin recovery, lower input costs, more volume, or reduced capex, not just organic growth. The starting base is our normalized mid-cycle median, not last year's number.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation → must improve by:
▾ Exactly how this 10-year figure is computed
Forecast length: 10 years, single flat growth rate (no fade)
Terminal growth after year 10: 2.5%
Discount rate: 14.2% (the rate the model used)
Price used: $37.87 — the live price shown on this page (not frozen)
Method: solve for the constant annual growth rate that makes the discounted 10-year FCF stream + terminal value equal today's price.
Within range of what a quality mature business can sustainably deliver. Not demanding.
For reference: Reasonable — sustainable for a quality business over time.
▾ How we computed this · Reality check thresholds · Assumptions
- Starting FCF/share: $2.78 (normalized multi-year median)
- Discount RateDiscount Rate — The annual return you demand for taking single-stock risk instead of buying a safe Treasury or index fund.
Why it matters: Higher discount rate = stricter valuation (a stock has to produce more cash to be worth holding). Lower = more generous.
Reference: 8–12% is standard · 9–10% matches S&P 500 historical return · Below 7% is illogical for single-stock risk
Full explanation →: 14.2% — standard 8-12%; 9-10% matches S&P 500 historical return - Terminal Growth RateTerminal Growth Rate — The growth rate we assume the company holds forever, after the explicit 10-year forecast period ends.
Why it matters: It anchors the long-tail value. Cannot mathematically exceed long-term GDP growth or the company eventually becomes larger than the global economy.
Reference: 2–3% (matches long-term US GDP growth) · Above 4% is mathematically problematic
Full explanation →: 2.5% — matches long-term GDP growth - Forecast horizon: 10 years explicit + terminal perpetuity
| ≤ 0% | Priced for decline — likely undervalued OR dying business |
| 5-12% | Reasonable; sustainable for quality businesses |
| 12-18% | Demanding — strong execution required |
| 18-25% | Exceptional — few companies sustain for a decade |
| 25-35% | Heroic — historically very rare |
| 35%+ | Borderline impossible at scale |
Sustaining 30%+ cash-flow growth for a full decade at scale is exceedingly rare — the bar is brutally high.
Use the interactive calculator below to change the discount rate, growth and terminal-growth assumptions and watch the value move.
Football field: where does the price sit?
Different valuation methods produce different fair-value ranges depending on assumptions. Plotting them together lets you see at a glance whether the current price is reasonable across approaches, or only one specific lens.
Industry multiples sourced from: broad market average (sector unknown). See the Peer Basket section below for the peer comparison and its limited-comparables caveat.
How does WS stack up against its closest peers?
We take the 8 same-industry companies most similar to WS (similar size) and check what investors are paying for each dollar of their revenue (or profits). If WS is much more expensive on the same yardstick, that's a red flag — unless you have a specific reason it deserves a premium. For a leveraged business, EV/EBIT and FCF yield (both in the table) are usually more reliable than EV/Sales, because revenue multiples ignore differences in margins and debt.
▾ What's "EV / Sales" in plain English?
EV (Enterprise Value) = market cap + total debt − cash. It's "what you'd pay to buy the entire company outright" — you pay the market cap to shareholders and take over their debt, but you keep their cash. EV is fairer than market cap alone because it includes the debt the new owner inherits.
EV / Sales = EV ÷ annual revenue. So "2.5×" means investors pay $2.50 of enterprise value per $1 of yearly sales. Higher = market is paying more per dollar of sales (usually because they expect future growth or fat margins).
p25 / median / p75 are the 25th, 50th (middle), and 75th percentile of the peers' multiples. Half the peers fall between p25 and p75. The median (p50) is the typical peer — that's the benchmark we compare to.
| EV / SalesEV / Sales — For every $1 of yearly revenue, this is how many dollars investors pay to own the whole business (including debt). Why it matters: Works for pre-profit growth companies where P/E and FCF don't apply. The most apples-to-apples cross-company multiple because it ignores accounting choices. Reference: 1–3x for mature companies · 4–10x for software/SaaS · 10–20x for hypergrowth · >20x is rare and demanding Full explanation → |
0.8x / 1.0x / 2.2x |
| EV / Gross ProfitEV / Gross Profit — Enterprise value divided by gross profit — the multiple paid for what each dollar of sales contributes after direct costs. Why it matters: More refined than EV/Sales for high-margin businesses (software, marketplaces) where gross margin is the real economic engine. Reference: 8–15x for SaaS · 15–25x for hypergrowth software · >30x demanding Full explanation → |
3.8x / 8.6x / 9.7x |
| EV / EBITEV / EBITDA — Enterprise value divided by earnings before interest, tax, depreciation, and amortization. Why it matters: A classic "what would a private buyer pay" multiple — used in M&A. Strips out tax and capital-structure noise. Reference: 8–12x for mature businesses · 15–25x for growth · Below 5x often signals distress Full explanation → |
1.5x / 9.3x / 22.5x |
Bold middle number = median peer. Half the peers trade above it, half below. Computed over 8 same-industry peers; implausible multiples excluded.
⚠️ Important caveat: peer multiples only work if the peers are genuinely comparable. Always check the peer list below — if the auto-picker grabbed micro-caps or unrelated businesses, the comparison is noise. A medical-device giant priced against tiny biotech startups won't produce a useful signal.
▾ View peer list (8)
| Ticker | Company | Industry | Mcap | EV/Sales | EV/GP | EV/EBIT | FCF Yield |
|---|---|---|---|---|---|---|---|
| SID | NATIONAL STEEL CO | Steel | $1.8B | — | 1.0x | 1.5x | 0.0% |
| WOR | WORTHINGTON ENTERPRISES, INC. | Steel | $2.8B | 2.7x | 9.7x | — | 6.7% |
| ROCK | GIBRALTAR INDUSTRIES, INC. | Steel | $1.1B | 1.0x | 3.8x | 9.3x | 11.5% |
| NWPX | NWPX Infrastructure, Inc. | Steel | $1.1B | 2.2x | 11.1x | 22.5x | 2.8% |
| GGB | GERDAU S.A. | Steel | $3.2B | — | — | — | — |
| MTUS | Metallus Inc. | Steel | $818M | 0.7x | 8.6x | — | 12.2% |
| SXC | SunCoke Energy, Inc. | Steel | $765M | 0.8x | — | — | 17.3% |
| PKX | POSCO HOLDINGS INC. | Steel | $5.4B | — | — | — | — |
Quality & solvency checks
Cheap stocks can be cheap for a reason. These screens warn when a low valuation comes paired with structural fragility.
Why it matters: Cheap-looking stocks (low P/E or P/B) often have low Z-scores because the market knows the company is dying. Z-score warns you before you fall into a value trap.
Reference: > 3.0 = safe zone · 1.81–3.0 = grey zone · < 1.81 = distress zone
Full explanation →
We can't produce a trustworthy Altman Z here: retained earnings weren't separately reported in our data, so a core input would have to be fabricated. Rather than show a categorical "distress" verdict from an invented number, we mark it unavailable. Judge financial health from the leverage, cash position, and the measurable Piotroski checks instead.
Why it matters: High score = fundamentals improving. Low score = deteriorating. Especially powerful for filtering cheap stocks: cheap + high F-score historically outperforms; cheap + low F-score is often a value trap.
Reference: 7–9 = strong · 4–6 = mediocre · 0–3 = weak
Full explanation →
▾ The checks — what passed, what didn't (and what we couldn't measure)
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✓ Positive net incomeNet income $110.7M in the latest year.
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✓ Positive operating cash flowOperating cash flow $230.3M (was $199.5M the prior year).
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✓ Cash flow backs up reported profitOperating cash flow $230.3M vs net income $110.7M.
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✗ Return on assets improvingReturn on assets 5.6% vs 8.3% a year ago.Why this matters: Is the company squeezing more profit out of each dollar of assets than last year? Rising = getting more efficient; falling = the opposite.
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✗ Debt load (vs assets)Long-term debt is 7.7% of assets vs 0.0% a year ago ($151.5M now).Why this matters: Rising debt relative to assets means more risk and more cash going to interest instead of shareholders. Falling debt is a sign of strengthening.
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✓ Short-term liquidity (current ratio)Current ratio 1.66x vs 1.62x a year ago.
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✗ Share count (dilution)Share count rose 1.4% (49.8M → 50.5M year-over-year).Why this matters: Issuing lots of new shares splits the pie into more pieces, shrinking your slice. Stable or falling share count protects existing owners.
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✗ Pricing power (gross margin)Gross margin 12.6% vs 12.8% a year ago.Why this matters: Rising gross margin means stronger pricing power or lower input costs — a sign of competitive strength. Falling margin signals pressure.
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✗ Sales per asset (asset turnover)Asset turnover 1.58x vs 1.84x a year ago.Why this matters: Asset turnover measures how much revenue each dollar of assets generates. Rising = more productive use of the asset base.
Missing data is never counted as a pass or a fail — it's shown as n/a and excluded from the denominator. Each check compares the company against its own prior year.
What if you assume different inputs?
Here's where we land — and what happens if you change the assumptions. Drag the sliders to set your own Discount RateDiscount Rate — The annual return you demand for taking single-stock risk instead of buying a safe Treasury or index fund.
Why it matters: Higher discount rate = stricter valuation (a stock has to produce more cash to be worth holding). Lower = more generous.
Reference: 8–12% is standard · 9–10% matches S&P 500 historical return · Below 7% is illogical for single-stock risk
Full explanation → (the annual return you demand for single-stock risk) and terminal growth; the value updates live so you can see whether the stock looks cheaper or richer. The discount rate starts at 14.2%, the figure our model used for WS. Open Advanced to also change beta, growth and the rate path.
Note: at default inputs this calculator mirrors the headline model's three-scenario weighting (conservative/base/optimistic, 40/35/25), so its opening value should land close to the headline intrinsic value of $19.24. A small gap is rounding; a large one would be a data problem — and we check for it below.
14.2% — beta-based (CAPM), from this stock's BetaBeta — How much the stock moves when the overall market moves. 1.0 = moves with the market; 1.5 = moves 50% more than the market.
Why it matters: Higher beta = more volatile = should demand higher discount rate. Low beta stocks (utilities, consumer staples) move less.
Reference: Most stocks 0.5–1.5 · Defensives ~0.3 · High-vol tech ~1.5–2.0
Full explanation → of 1.77. The safe Treasury rate plus a premium scaled by how much more (or less) volatile the stock is than the market.
10.0% — sector/quality tier. A simpler hurdle set by industry and business durability: lower for stable, wide-moat companies; higher for speculative or micro-caps.
The headline value and this calculator start at 14.2% — the beta-based rate. Drag the slider to the other rate to see the full range.
+96.8%
At the default assumptions the flat path lands near our published value of $19.24. Move any slider to recompute it with your own.
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⚙ Advanced — tinker with every input (beta, growth, rate path, margin → full intrinsic value)
WS is deeply overvalued, trading at a premium of +119.3% to the model's intrinsic valueIntrinsic Value — Our DCF model's estimate of what each share is mathematically worth based on projected cash flows.
Why it matters: Compare to current price. Below IV = potentially undervalued. Above IV = priced for growth that must actually happen.
Reference: Model-derived; quality depends on data and assumptions.
Full explanation →. The market appears to be paying up for the company's expanding gross margins and consistent profitability, despite declining revenues. The primary quantifiable risk is the negative historical FCFFree Cash Flow (FCF) — Operating cash flow minus capital spending: cash left after a company covers operating costs, taxes and interest and reinvests in the business — but BEFORE repaying debt principal or paying dividends. The cash actually available to investors.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation → decline of 4.6%, which the model floors at 0%.
As of 2 months ago
Anatomy of a share
What you're buying per share. Bars are at the same scale so you can see the relative size of revenue, costs, cash flow, and debt — not just read them in a table.
What's free cash flow / what do these mean?
Revenue per share — how much the business earns from customers, divided by the number of shares outstanding. Top of the income statement.
Earnings per share — profit left after operating costs, interest, and taxes, per share. Two versions appear on this page and are not interchangeable: GAAP diluted EPS uses the company's weighted-average diluted share count during the reporting period (this is the "earnings" in "price-to-earnings"); net income per current share divides annual net income by today's share count. They differ whenever the share count has changed.
Owner-earnings free cash flow per share — the cash the business produces for shareholders. Savng's owner-earnings FCF subtracts capital expenditures and stock-based compensation from operating cash flow (SBC is a real dilution cost even though it's non-cash). This is deliberately more conservative than "standard" FCF, which subtracts only capital expenditures — so our figure is lower than the headline FCF you'll see elsewhere. FCF funds dividends, buybacks, debt repayment, and acquisitions; a company can report positive earnings yet negative FCF.
Debt per share — total interest-bearing borrowings divided by shares. High debt-per-share next to thin FCF-per-share is a fragility signal.
What you actually need to decide
Every stock price is a disagreement. Here's the single thing that must go right for the bulls, the single thing that breaks the thesis, and the concrete signposts to watch so you can update your view as real results arrive.
- Revenue growth rate in upcoming quarters
- Further expansion of gross margin
- Trends in long-term debt
The trend, in plain numbers (2024 → 2025)
Straight from the financial statements — no model, no opinion. For a small or unprofitable company, the direction of these numbers usually tells you more than any single valuation.
- Free cash flow rose to $88.9M.
- Revenue fell -10% to $3.09B.
- Net income fell -28% to $110.7M.
Roughly flat: Gross margin held to 13% (0 pts).
Management & Leadership
Worthington Steel, Inc. was spun off from Worthington Industries in late 2023, with Geoff Gilmore serving as its President and CEO. He previously led Worthington Industries' Steel Processing business. Joseph Massaro is the company's CFO.
What They Make
Worthington Steel processes and sells various steel products, including flat-rolled steel, to customers primarily in the automotive, construction, and agricultural industries.
End Markets
Revenue Drivers
Why Is It Priced Like This?
Why Customers Pay
The market prices WS at a premium of +119.3% to the model, likely due to its expanding gross margin (9.7% to 12.6%) and consistent profitability (net income positive 4/4 yrs). Investors may be anticipating future growth or improved efficiency despite the current revenue decline of -8.7%/yr over three years.
Three Scenarios, Weighted
| Scenario | IV | vs Price | Weight |
|---|---|---|---|
| Conservative | $16.91 | -55.3% | 40% |
| Base | $19.53 | -48.4% | 35% |
| Optimistic | $22.57 | -40.4% | 25% |
| Weighted | $19.24 | -49.2% | 100% |
What has to be true (historical comparison)
To justify today's price, WS's owner-earnings cash flow must grow to roughly 2.1× its current level over 5 years. If profit margins and share count stay roughly constant, that is equivalent to about the same multiple of revenue. Each card below is a real company that grew revenue at a comparable magnitude — possibly in a different industry; the point is the growth magnitude required and its historical base rate, not that WS resembles these businesses. The green/amber line shows whether that company cleared or fell short of the bar, and the tag on the right shows how it actually fared afterward (succeeded, faded, or wiped out).
Picks-and-shovels for the internet. Real business, real profits, but priced at 200x earnings. Took 20+ years to make a new all-time high. Revenue grew only 4x in 20 years.
A GPU company priced for gaming. The data-center business was 6% of revenue. Ten years later the data-center business is 80% of revenue and the company 200x'd.
What 'scale' looked like in 1999 for comparison purposes. Big and profitable. Revenue actually declined over the next 20 years.
Anchors are hand-curated 10-K snapshots. We surface the three whose 5-year revenue growth most-closely brackets the rate required to justify the current price. Source: SEC EDGAR.
Business Model & Valuation
How They Make Money
The company's long-term debt is rising from $0M to $152M, indicating a reliance on debt financing, with no specific dividend or buyback rates available.
Normalized FCF High
Cyclical/commodity sector (Steel): normalized FCF uses 5-year median to smooth peak/trough distortions.
Show advanced inputs
| RevenueGrowth | -8.7% |
| EpsGrowth | -15.7% |
| HistoricalFcfGrowth | -41.4% |
| SectorDefault | 5.0% |
| BestEstimate | -4.6% |
| Method | blend(70% revenue_cagr, 30% sector) |
| GrowthBasis | total |
What this model does NOT do: this is a consolidated owner-earnings FCF model. Standalone segment assumptions: none. It does not project production volumes, realized commodity prices and unit cash costs independently; their combined effect is embedded in the historical revenue and cash-flow trend the model extrapolates. The calculator above can only approximate a segment's impact through the single consolidated growth rate — it cannot model any one line separately. For a true segment-level view, build a separate model from the company's segment disclosures.
Maturity & Competitive Position
Moat Signals
Revenue is declining at -8.7%/yr over 3 years, from $4069M to $3093M.
Geography & Markets
Worthington Steel is headquartered in the US and primarily operates within North America, serving various industrial markets. Specific geographic revenue mix percentages are not available from current data.
Geographic Risks
Market Signals
These are timing signals, not value signals — they describe the stock's recent price behavior, not what the business is worth. Use them for the "the thesis looks good, but is now the moment?" question. Each tile below explains what it's saying.
Why it matters: Short-term contrarian indicator. Extreme readings often precede mean reversion, though not always.
Reference: 30–70 normal · >70 overbought · <30 oversold
Full explanation → (14)63.6NeutralMomentum is balanced — neither overbought nor oversold.
Why it matters: When the fast line crosses above the slow line, short-term momentum is turning up; below, turning down. A timing cue, not a value signal.
Reference: Line above signal = bullish momentum · below = bearish
Full explanation →BullishLine above signalThe fast trend is above the slow trend — short-term momentum is currently upward.
Technicals describe price, not the business. A great company can have a "bearish" tape (a buying chance) and a weak one a "bullish" tape (a trap). Pair these with the valuation and health sections above.
QUALITY
Data Quality & Risk Flags (4 notes — click to expand/collapse)
Guardrail Notes (3)
- Cyclical sector: using normalized cash flow (median OCF minus estimated maintenance capex).
- Median OCF: $214.90M, est. maintenance capex: $74.45M, normalized FCF: $140.45M.
- Historical FCF growth is negative (-4.6%) - likely reflects commodity cycle peak. Flooring at 0%.
FINANCIALS
Financial Statements (5-year tables — click to expand)
From Worthington Steel, Inc.'s SEC filings (EDGAR).
Income (5yr)
| Year | Revenue | Net Income | EPS |
|---|---|---|---|
| 2025 | 3.1B | 110.7M | $2.19 |
| 2024 | 3.4B | 154.7M | $3.11 |
| 2023 | 3.6B | 87.1M | $1.77 |
| 2022 | 4.1B | 180.4M | $3.66 |
Cash Flow (5yr)
| Year | Operating CF | CapEx | − SBC & adj. | Free Cash Flow |
|---|---|---|---|---|
| 2025 | 230.3M | 130.4M | 11.0M | 88.9M |
| 2024 | 199.5M | 103.4M | 10.3M | 85.8M |
| 2023 | 315.0M | 45.5M | 10.4M | 259.1M |
| 2022 | 39.5M | 36.4M | 8.7M | -5.6M |
How we define FCF: operating cash flow − capital expenditure − stock-based compensation (owner-earnings basis — SBC is a real cost to shareholders even though it's non-cash). Latest year: 230.3M − 130.4M − 11.0M (SBC & adj.) = 88.9M. This is the same owner-earnings FCF definition the valuation model uses, though the DCF's starting value is a normalized multi-year median, not this single year.
Balance Sheet
| Total Assets | 2.0B |
| Total Liabilities | 763.9M |
| Equity | 1.1B |
| Total Debt | 149.2M |