FRD · Friedman Industries
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $43.17
Note written ·
Price against the kill line
12.7% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $43.17, on record since 11 November 2026. The shares are down 21.5% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $43.17, which would put the shares back near their late-October level and show them leading the S&P 500 again. A December-quarter report with net earnings above the $15.6 million of the September quarter would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Materials
Quarter to 30 September 2026, filed 5 November 2026
- Revenue, latest quarter ($M)
- 287
- Revenue, change on a year (%)
- +88.2
- Gross margin (%)
- 12.8
- Operating margin (%)
- 12.8
- Net cash, cash less debt ($M)
- −99.5
All filed numbers
What Friedman Industries reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 287 | +88.2 | 12.8 | 12.8 |
| first filed | 240 | +78.1 | 8.8 | 8.8 |
| first filed | 168 | +78.6 | 2.3 | 2.3 |
| first filed | 152 | +42.7 | 1.9 | 1.9 |
| first filed | 135 | +17.7 | 5.2 | 5.2 |
| Pre-tax income ($M) | 20.6 |
| Net income ($M) | 15.6 |
| Diluted shares, change on a year (%) | Not reported |
| Operating cash flow ($M) | Not available |
| Capital spending ($M) | Not available |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 5.6 |
| Debt ($M) credit line plus notes | 105 |
| Net cash, cash less debt ($M) | −99.5 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 117 |
| Inventory ($M) | 202 |
| Shareholders' equity ($M) | 180 |
| Market value ($M) | 272 |
| Enterprise value, market value plus net debt ($M) | 371 |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | Not available |
| Price to book value (×) | 1.5 |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 2.2% of shares outstanding sold short, 4.3 days of average trading to cover, −1.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $123K | $0 |
The thesis
Friedman Industries reported a record September quarter on 5 November 2026, and management guided to higher margins, yet the shares are more likely to lag the S&P 500 than lead it over the next three months. The shares closed at $38.31 on 11 November 2026, 13.3% below their level three months earlier, even though quarterly net earnings rose to $15.6 million from $2.2 million. The market is treating the record as the peak of the margin cycle. The December-quarter report, not yet dated by the company, settles whether higher steel prices keep turning into higher margins.
Net sales for the quarter ended 30 September 2026 were $286.8 million, up 88% from $152.4 million. Diluted earnings per share were $2.19 against $0.32 (company release, 5 November 2026).
The shares closed at $35.50 on 5 November 2026 and $36.00 on 6 November 2026. They recovered to $39.32 on 10 November 2026, then closed at $38.31 on 11 November 2026 (adjusted daily closes).
Bullish and bearish views on Friedman Industries Inc.
The bull case on Friedman Industries Inc. (FRD), in brief: record quarter on every headline measure. The bear case: the shares fell around a record report.
Bull case
- Record quarter on every headline measure. Net earnings were $15.6 million against $2.2 million a year earlier. EBITDA (earnings before interest, taxes, depreciation and amortization) was $23.0 million against $4.7 million (company release, 5 November 2026). Six-month net earnings were $28.4 million against $7.3 million.
- Mill steel prices are still rising. Nucor, the large U.S. producer, set its hot-rolled coil spot price at $1,295 per short ton for the week of 9 November 2026, up $15 from the prior week and the 17th weekly increase in a row (GMK Center, 10 November 2026). Management links continued margin improvement to higher selling prices.
- Earnings rose despite larger hedge charges. Losses on economic hedges were $14.6 million in the September quarter against $2.8 million in the June quarter. Net earnings still rose from $12.8 million to $15.6 million. Management said $9.8 million of the charge is unrealized and relates to open positions on metal not yet sold.
- Flat-roll profit multiplied. Flat-roll operating earnings were $40.7 million against $5.7 million a year earlier. The average selling price on inventory tons was about $1,430 per ton against about $963 (company release, 5 November 2026).
- Volume beat the August outlook. On 6 August 2026 management expected September-quarter volume comparable to the June quarter. Tons sold were about 219,500, up 23% from about 179,000, with about 31,000 tons of the increase from existing facilities.
Bear case
- The shares fell around a record report. The close dropped from $38.79 on 4 November 2026 to $35.50 on 5 November 2026. The 3-month change to 11 November 2026 is −13.3%, and the last close is 21.4% below the 52-week intraday high of $48.77 set on 18 August 2026.
- Seasonality caps volume. Management expects December-quarter volume to follow normal seasonal patterns after a record 219,500 tons. Margin per ton has to carry any earnings growth.
- Hedge losses are rising. Six-month hedge losses were $17.4 million against a $1.1 million gain a year earlier. If steel prices fall, unrealized hedge positions and lower selling prices would both weigh on reported results.
- Acquisition flatters the comparison. About 9,500 of the 40,500 tons added year over year came from Century Metals & Supplies, acquired in August 2025 (company release, 5 November 2026). Organic growth is smaller than the 23% headline.
- The balance sheet grew with the business. Total liabilities were $245.5 million at 30 September 2026 against $185.3 million at 31 March 2026. Total assets rose to $425.5 million from $336.8 million, and stockholders' equity to $180.1 million from $151.5 million.
- Insider filings show no open-market buying. SEC Form 4 filings dated 3 November 2026 show 8,500 shares withheld for tax from Chief Operating Officer Gaurav Chhibbar at $42.16 on 1 November 2026, and 238-share grants to each of five directors. These are withholding and awards, not purchases.
Price setup
The quoted close on 11 November 2026 was $38.31. The 52-week intraday high is $48.77 (18 August 2026), and the 52-week closing low is $17.01 (13 March 2026).
The shares sit below the 50-day average of $41.27 and above the 200-day average of $30.15 (adjusted closes, as of 11 November 2026). The 200-day average is well below the price because the shares roughly doubled from the March low. The 50-day average above the price shows the autumn decline has not yet been recovered.
The company declared a $0.04-per-share quarterly dividend with a 23 October 2026 record date and a 13 November 2026 payment date.
Catalysts ahead
- ~16 November 2026 (est.): Nucor's weekly hot-rolled coil spot price announcement for the week of 16 November 2026. Management ties continued margin improvement to higher selling prices; a first decline after 17 weekly increases would weaken that link.
- ~February 2027 (est.): December-quarter results, not yet dated by the company. Shows whether sales margins improved again after the record September quarter and how hedge charges moved.
What would change the view
A daily close above $43.17, which would put the shares back near their late-October level and show them leading the S&P 500 again. A December-quarter report with net earnings above the $15.6 million of the September quarter would also show the shares leading.
What it trades with
Friedman's results follow U.S. hot-rolled coil prices and the mill pricing of producers such as Nucor. Its earnings also carry hedge accounting swings that can move opposite to physical margins. Its fiscal year ends 31 March, so the September quarter is the second fiscal quarter.
The evidence, claim by claim (7)
- Quarter ended 30 September 2026: net sales $286.8M (+88%), net earnings $15.6M, diluted EPS $2.19 vs $0.32, EBITDA $23.0M vs $4.7M. Friedman Industries second-quarter results release (8-K exhibit) · as of
- Hedging losses were $14.6M in the quarter, of which $9.8M is unrealized on open positions for unsold metal; six-month hedge loss was $17.4M. Friedman Industries second-quarter results release (8-K exhibit) · as of
- Flat-roll operating earnings were $40.7M vs $5.7M; flat-roll average selling price on inventory tons was about $1,430 per ton vs about $963. Friedman Industries second-quarter results release (8-K exhibit) · as of
- Tons sold were about 219,500, up 23% from about 179,000; management expects normal seasonality in the December quarter and continued improvement in physical margins. Friedman Industries second-quarter results release (8-K exhibit) · as of
- Total assets $425.5M, total liabilities $245.5M and stockholders' equity $180.1M at 30 September 2026. Friedman Industries second-quarter results release (8-K exhibit) · as of
- Nucor set its hot-rolled coil consumer spot price at $1,295 per short ton for the week of 9 November 2026, up $15 and the 17th consecutive weekly increase. GMK Center, 10 November 2026 · as of
- COO Gaurav Chhibbar had 8,500 shares withheld for tax at $42.16 on 1 November 2026; five directors each received a 238-share award. SEC Form 4 filings dated 3 November 2026 · as of
Sources
- FRIEDMAN INDUSTRIES INC - Form 8-K - FY2026 · sec.gov ·
- Stockhouse ·
- News Global Market hot-rolled prices 553 10 November 2026 · gmk.center ·
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