Friedman Industries Inc (NASDAQ: FRD)

Sector: Basic Materials Industry: Steel CIK: 0000039092
Market Cap 139.26 Mn
P/B 1.13
P/E 7.80
P/S 0.27
ROIC (Qtr) 6.47
Div Yield % 0.64
Rev 1y % (Qtr) 78.56
Total Debt (Qtr) 92.89 Mn
Debt/Equity (Qtr) 0.65
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About

Investment thesis

Bull case

  • Strong tangible asset base of 311.86M provides 3.36x coverage of total debt 92.89M, indicating robust asset backing and low credit risk.
  • Retained earnings of 110.71M provide full 1.19x coverage of long-term debt 92.89M, indicating strong internal capital position.
  • Tangible assets of 311.86M provide robust 68.60x coverage of other current liabilities 4.55M, indicating strong asset backing.
  • Free cash flow of (6.68M) provides excellent 5.94x coverage of dividends (1.12M), indicating sustainable shareholder returns.
  • Retained earnings of 110.71M provide strong 24.35x coverage of other current liabilities 4.55M, indicating earnings quality.

Bear case

  • Operating cash flow of (658000) barely covers its investment activities of (51.63M), with a coverage ratio of 0.01, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 3M against inventory of 169.17M, the 0.02 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of (658000) provides thin coverage of dividend payments of (1.12M) with a 0.58 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 3M provide limited coverage of acquisition spending of (45.60M), which is -0.07x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of (658000) shows concerning coverage of stock compensation expenses of 371000, with a -1.77 ratio indicating potential earnings quality issues.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Steel
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NUE Nucor Corp 58.33 Bn 74.96 2.91 6.85 Bn
2 STLD Steel Dynamics Inc 40.60 Bn 83.81 4.34 3.78 Bn
3 RS Reliance, Inc. 26.37 Bn 77.34 2.59 1.69 Bn
4 PKX Posco Holdings Inc. 19.54 Bn 56.38 0.39 19.69 Bn
5 CMC COMMERCIAL METALS Co 9.18 Bn 198.05 2.39 3.35 Bn
6 CLF Cleveland-Cliffs Inc. 5.34 Bn -3.62 0.29 7.25 Bn
7 WS Worthington Steel, Inc. 2.24 Bn 18.89 0.72 0.28 Bn
8 MTUS Metallus Inc. 0.97 Bn -116.67 0.86 0.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.58 1.89
EV to Cash from Ops. EV/CFO 2.24 4.54
EV to Debt EV to Debt 1.94 -3.26
EV to EBIT EV/EBIT 6.91 -15.16
EV to EBITDA EV/EBITDA 8.24 -139.64
EV to Free Cash Flow [EV/FCF] EV/FCF 2.71 46.24
EV to Market Cap EV to Market Cap 1.29 -0.56
EV to Revenue EV/Rev 0.34 2.70
Price to Book Value [P/B] P/B 1.13 8.16
Price to Earnings [P/E] P/E 7.80 22.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 13.92 -41.90
Dividend Payout Ratio % Div Payout % (Qtr) 7.20 41.41
Dividend per Basic Share Div per Share (Qtr) 0.16 0.99
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -17.04 24.68
Interest Coverage Int. cover (Qtr) 6.88 10.33
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -41.24 -25.11
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 179.53 72.27
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 24.03
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 131.19 -69.57
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 217.63 -69.57
EBIT Growth (1y) % EBIT 1y % (Qtr) 115.71 -69.73
EBT Growth (1y) % EBT 1y % (Qtr) 156.37 -89.44
EPS Growth (1y) % EPS 1y % (Qtr) 177.50 -67.10
FCF Growth (1y) % FCF 1y % (Qtr) -193.78 -11.81
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 78.78 -592.10
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.87 0.83
Cash Payout Ratio Cash Payout (Qtr) 0.21 0.30
Cash Ratio Cash Ratio (Qtr) 0.05 11.50
Current Ratio Curr Ratio (Qtr) 3.59 15.74
Debt to Equity Ratio Debt/Equity (Qtr) 0.65 0.62
Interest Cover Ratio Int Coverage (Qtr) 6.88 10.33
Times Interest Earned Times Interest Earned (Qtr) 6.88 10.33
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 4.70 -0.83
EBIT Margin % EBIT Margin % (Qtr) 4.10 571.21
EBT Margin % EBT Margin % (Qtr) 3.50 -4.72
Gross Margin % Gross Margin % (Qtr) 7.90 17.71
Net Profit Margin % Net Margin % (Qtr) 2.70 -4.68