Sims walked into this result with a stock that has drifted, down about 13% over the past week and 7% over the past month, even though the 90 day return is slightly positive. The market has been treating recent strength as fragile. The earnings print has now forced a reassessment.
The headline is simple. Underlying earnings before interest and tax jumped to A$468 million and return on invested capital rose to 11.7%, while the group stayed free cash flow positive and paid a fully franked A$0.34 dividend for FY26. The question now is whether that kind of profitability is being priced in.
Is Sims at A$22.97 a genuine value opportunity given a DCF fair value of A$52.34, or is the premium P/E of 18.1x flashing caution? Compare that gap directly in the detailed valuation analysis for Sims.
FY 2026 Earnings Summary
- Revenue FY 2026: A$8,060.9 million vs. FY 2025 A$7,524.5 million (up 7.1%)
- Net Income FY 2026: A$245.3 million vs. FY 2025 A$2.4 million (very large increase)
- Basic EPS FY 2026: A$1.272 per share vs. FY 2025 A$0.012443 per share (very large increase)
- Net Profit Margin FY 2026: 3% vs. FY 2025 0.03% (margin improved)
Prefer clear charts instead of scrolling through dense earnings tables and raw figures for Sims? View a full visual breakdown of the company, with a focus on valuation and how the market is currently pricing the stock, in our company report for Sims.
Sims Bull Case Leans Heavily on Proving SLS Leverage
Bulls argue Sims can turn SLS and richer non ferrous exposure into a more profitable, less cyclical group. FY26 results give solid evidence that this is at least starting to happen. Underlying EBIT of A$468 million and ROIC of 11.7% show the business is already earning above its capital hurdle, which is a key milestone for any quality thesis.
Within that, SLS is doing what the bullish story asked for. Repurposed units grew sharply, hyperscaler relationships are deeper and SLS is now a material contributor to group EBIT, helped by very strong DDR4 pricing. On the metals side, higher unprocessed intake and better shredder utilisation in North America and South America Recycling align with expectations that Sims would use its network to capture more non ferrous margin. ANZ is still lagging, so the portfolio is not yet firing evenly, but the earnings mix is clearly shifting in the intended direction.
Compare this operational momentum with what the street is actually pricing in. See the consensus price target analysis for Sims to check whether analyst targets line up with the new Sims earnings profile.Sims Bear Case: Cyclic Boost, Structural Questions
The bearish view on Sims is that earnings are overly tied to cyclical price spikes in scrap and memory, while structural risks in ferrous and SLS concentration could cap long term quality. FY26 results do not fully clear that hurdle. Underlying EBIT of A$468 million is heavily helped by very strong DDR4 pricing and elevated non ferrous prices. Management itself guides SLS H1 FY27 EBIT down to A$75–90 million, pointing to timing volatility and fewer high speed DDR4 volumes. That supports the concern that the current SLS mix may not yet be a steady base.
On the metals side, ANZ still faces pressure from Chinese exports and relies on future domestic mill projects that are not yet reflected in earnings. Cost control is solid, but with labor roughly half of operating costs, bears can argue that the easy efficiency wins are largely behind Sims.
With Sims now carrying richer earnings and a premium P/E, the real question is how much balance sheet strength and cash coverage sit behind those numbers. Check the underlying liquidity, debt and cash runway in our financial health analysis of Sims stock.Stay Ahead With Sims And Simply Wall St
If the valuation gap between Sims' A$22.97 share price and the A$52.34 DCF fair value makes you want to keep a closer eye on it, register for free with Simply Wall St and add Sims to your Watchlist to track price moves against fundamentals and watch for a potential entry point. After you own shares, organise your holdings in the Portfolio Command Center so you only see focused alerts on key earnings events, balance sheet shifts and valuation changes that matter. For longer term context, tap into investor sentiment and different angles on Sims through the Community and see how other investors are interpreting new information. This combination helps you spot hidden catalysts or emerging risks earlier and stay ahead of the broader market.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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