Schnitzer Steel Issues Profit Warning, Market Cycles Point To More Weakness

Schnitzer Steel (SCHN) sank 10% on Thursday after the company warned that earnings would be lower than expected.

Based on its market cycles, we expect a rebound in the coming weeks, and then for the weakness to resume.

Schnitzer issued an update to its previous earnings guidance, now projecting $0.38-0.43 per share. This is below the average Wall Street estimate of $0.57 per share. 

The company’s statement pointed to the following factors: “Chinese tariffs on imports from the U.S. and a global slowdown in manufacturing production, as well as new Chinese import regulations, effective July 1, 2019.” 

Our approach to stock analysis uses market cycles to project price action.

Our analysis is that the stock is late in the declining phase of its current cycle, with a low due in a few weeks. While we do expect a recovery, the stock has been weak and we expect that weakness to resume. 

Schnitzer Steel (SCHN) Stock Weekly Chart 

schn stock ticker research image schnitzer steel profit warning bearish

For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel.

Twitter:  @askslim

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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