Reliance just dropped its Q3 2026 scorecard and the equity market barely flinched. The stock slipped about 0.8% on Thursday to roughly US$418, even after the company posted record quarterly sales of US$5,213.2m and quarterly basic earnings per share of US$7.90. For a metals service center business that trades on volume, pricing and execution, that disconnect between a red screen and strong profit delivery sets up a clear question for investors. Is this a cool headed read of a rich P/E and DCF gap, or a reflexive fade of a very strong print?
Impressed by Reliance’s record Q3 earnings print but uneasy about paying up when the market is already wrestling with a rich P/E story? Take a look at our screener of solid operators with strong balance sheets and cash generation using the list of solid balance sheet and fundamentals stocks (26 results).
Q3 2026 Earnings Summary
- Revenue (Q3 2026 vs. Q3 2025): US$5,213.2m vs. US$3,651.2m (up 42.8%)
- Net Income (Q3 2026 vs. Q3 2025): US$402.9m vs. US$189.5m (up 112.7%)
- Basic EPS (Q3 2026 vs. Q3 2025): US$7.90 vs. US$3.61 (up 118.7%)
- Tons Sold Volume (Q3 2026 vs. Q3 2025): Record quarterly tons, with Q3 shipments up 15.6% year over year
Ask Charlie what Reliance really signaled with its border wall bets.
Reliance bull case: processing, projects, and proof points
Optimists argue Reliance can turn demand into higher quality earnings through processing heavy growth projects and government work.
"A key factor is that Reliance continues to execute on large government programs and infrastructure projects while managing higher LIFO expense and supply tightness in key products so that volumes and profitability remain resilient."
Q3 shows real traction. Record tons sold, a border wall contract that added roughly 3.7% to sequential tonnage and about US$0.74 of EPS, and FIFO gross margin at 31.6% all point to processing led resilience even while LIFO expense stepped up materially.
Reliance bear case: tariffs, LIFO and margin strain
The concern is that tariff policy and inventory accounting erode profitability even when Reliance keeps the trucks busy.
"Management has raised full year 2026 LIFO expense guidance in stages from US$100 million to US$300 million as carbon and aluminum costs moved higher. This indicates that a prolonged period of elevated or volatile input prices could continue to drive higher non cash inventory charges and reduce reported gross margin and earnings, even if underlying demand and operating performance for Reliance remain solid."
That warning is live. Full year LIFO expense guidance now sits at US$450m, with Q3 alone at US$187.5m and Q4 flagged at about US$112.5m, which is already trimming reported gross margin by several hundred basis points versus FIFO levels.
One Narrative disagrees with today's price. → See where this Narrative says Reliance should trade.
Hunt For Mispriced Execution Stories
Reliance just showed that strong reported results and a muted share price reaction can appear together. The real opportunity may be assessing where expectations and current prices still look misaligned.
- Company 1 - 28% below our estimate - help utilities modernize aging grids and diagnostics as electrification and aerospace demand reshape equipment programs.
- Company 2 - 23% below our estimate - expand manufacturing lines for AI-focused data center optics as customers shift more photonics and packaging work.
- Company 3 - 33% below our estimate - scale data center GPU platforms that rely on integrated hardware and software while clients evaluate long term AI infrastructure plans.
Three companies from the same screener. Open every one of the 30 undervalued companies on it →
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