Worthington Industries, Inc Overcomes Inflation Headwind Worthington Industries (NYSE: WOR) is well-positioned for the current market as the marker of specialty steel products for a wide range of businesses and applications. The company is benefiting not...

Worthington's 2.2% Yield Is A Buy

Worthington Industries (NYSE: WOR) is well-positioned for the current market as the marker of specialty steel products for a wide range of businesses and applications. The company is benefiting not only from demand but from rising prices for steel that are juicing the top and bottom-line results. The net result is a business that is not only growing but accelerating and at a rate above the Marketbeat.com analyst's consensus. With shares trading at a mere 9X earnings and paying a healthy 2.2% dividend we can't help but be interested.

Worthington Industries Accelerates And Grows

Worthington Industries had a very strong quarter in which the $1.2 billion in revenue grew sequentially to set another new all-time high. The net is up 64.1% from last year, 500 basis points more than in the previous quarter, and underlying fundamentals point to continued growth. The gains are driven primarily by steel prices and to a lesser extent volume with demand high across all segments. The steel Processing segment grew more than 100% YOY on the margin between raw and processed steel while the Consumer and Building segments grew 20% and 29%. The Sustainable Energy segment is the only one to recede contracting a little more than 3.0%.

Moving down the report, the company experienced a 36% increase in the margin that resulted in a doubling of the operating income. On the bottom line, the $2.15 in GAAP earnings reverses a loss of $1.40 in the previous quarter while the adjusted $2.12 beat by $0.26. This, plus the Q1 strength, has YTD EPS at $4.58 and nearly 85% of the FY consensus estimate so we are expecting to see some analyst's activity in the very near term. The company did not give specific guidance for the coming quarter but the trends are in favor of strength and execs are optimistic.

"We are optimistic that we will continue to see healthy demand across our key end markets, and we are very excited to have recently closed on our largest acquisition to date with the purchase of Tempel Steel. The addition of Tempel makes us a global leader in the electrical steel market complementing our existing sustainable mobility offerings in lightweighting and hydrogen and positioning us to more widely serve rapidly growing global markets for electric vehicles and electricity infrastructure," said President and CEO Andy Rose.

Worthington Industries Pays A Worthy Dividend

Worthington Industries is not a high-yield dividend payer but it is well above average in every way. The payout is worth about 2.2% with shares near $52.25 and it looks as safe as a stock market dividend can be. The company has been raising the payout for the last 8 years and is only paying out 20% of a Marketbeat.com consensus that we know to be far, far too low. The payout ratio versus the YTD results is closer to 25% (still very good) with half the year of earnings still to come in so the final payout ratio could be in the single digits. The balance sheet is strong as well with low debt, leverage, and ample coverage so there are no red flags and every expectation dividend increases will continue.

The Technical Outlook: Worthington Industries Pops On Results

Shares of Worthington Industries were up as much as 5% in the wake of the Q2 report and appear to be forming a bottom. The caveat is that, while support is evident at $48, resistance is still lingering at the short-term moving average. Assuming the short-term EMA can be overcome, we see this stock moving back up into its recent range and possibly hitting the $60 mark before the next reporting cycle.