What Happened?
Shares of steel wire manufacturer Insteel (NYSE: IIIN) jumped 11.9% in the morning session after the company reported impressive first-quarter 2025 (fiscal Q2) results, which significantly blew past analysts' sales, EPS and EBITDA estimates.
What stood out was a 26% rise in sales which came from stronger demand in construction and more business from the companies it bought earlier. Shipments also went up nearly 18% from the previous quarter, showing some solid momentum. While the company didn't give a clear forecast, its tone was upbeat. It expected demand to stay strong and saw new tariff rules as helpful since they cut down on cheap imports.
The company referenced Section 232 steel tariff rules adding "Significantly, however, because we have lived with the Section 232 steel tariff for many years, we view the impact of the Administration's recent actions as positive for the company since the Section 232 tariff was expanded to derivative products, and steel is generally not subject to reciprocal tariffs. "
Overall, this was a strong quarter as rising volumes, improving margins, and a more favorable trade environment gave Insteel a solid runway for the months ahead.
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What The Market Is Telling Us
Insteel’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. But moves this big are rare even for Insteel and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 11.8% on the news that the company reported disappointing third-quarter 2024 results that fell below analysts' revenue and EPS expectations. Notably, sales declined 15% year on year, driven by a 12.9% decrease in average selling prices and a 2.1% decline in shipments. While pricing was impacted by competitive pressure, shipments declined due to adverse weather conditions. Overall, this was a mediocre quarter.
Insteel is up 13.9% since the beginning of the year, but at $29.87 per share, it is still trading 14.3% below its 52-week high of $34.86 from April 2024. Investors who bought $1,000 worth of Insteel’s shares 5 years ago would now be looking at an investment worth $1,744.
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