Insteel Industries Surges 30.9% YTD: Is It Time to Buy the Stock?

Insteel Industries, Inc.’s IIIN shares have surged 30.9% in the year-to-date period against the industry and the S&P 500’s decline of 8% and 0.4%, respectively. The manufacturer of steel wire reinforcing products has outperformed its market peers like Atkore Inc. ATKR and Belden Inc. BDC, which have lost 20.7% and 4.5%, respectively, over the same time frame.

IIIN Outperforms Industry, S&P500 & Peers

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Closing at $35.37 in the last trading session, the stock is trading close to its 52-week high of $37.61 and higher than its 52-week low of $22.49. The stock is trading above both its 50-day and 200-day moving averages, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company's financial health and long-term prospects.

IIIN Shares’ 50-Day and 200-Day SMA

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What’s Driving Insteel Industries?

The strongest driver of Insteel Industries’ business at the moment is strengthening demand for welded wire reinforcement (WWR) products across its end markets, supported by stability in the construction market and positive contributions from its acquired assets.

Solid demand for the company’s Prestressed Concrete (PC) strand products, on account of the expansion of the Section 232 steel tariff to derivative products by the U.S. administration, is also driving its performance. In the second quarter of fiscal 2025 (ended March 29, 2025), its net sales from WWR products increased 43.3% year over year to $100 million, while that from PC strand products improved 5.2% to $60.6 million.

The company expects to capitalize on growth opportunities in the non-residential construction market, supported by strong federal funding from the Infrastructure Investment and Jobs Act. This is expected to drive significant project activity in the quarters ahead, which should support higher shipments and operating levels for IIIN.

Insteel Industries believes in adding complementary businesses to its portfolio via acquisitions. IIIN acquired substantially all of the assets of EWP and certain related assets of LSG (the EWP Acquisition) in October 2024. With the EWP buyout, the company expanded its WWR product portfolio and strengthened its competitive position within the Midwest market. Also, the acquisition of certain assets of O’Brien Wire Products in November 2024 boosted its WWR offerings across both the non-residential and residential construction markets.

IIIN’s shareholder-friendly policies also add to its appeal. For instance, in the first six months of fiscal 2025, it paid out dividends of $20.6 million and repurchased shares worth $1.7 million.

Given the strength across its businesses, the Zacks Consensus Estimate for Insteel Industries’ fiscal 2025 (ending September 2025) and fiscal 2026 (ending September 2026) revenues is pegged at $640.4 million and $698.7 million, indicating year-over-year growth of 21% and 9.1%, respectively.

It’s worth noting that IIIN operates in the competitive metal fabrication market, comprising well-recognised providers of highly engineered products. As one of its peers, Atkore is well-known for its electrical infrastructure products and service solutions.

Estimate Revision Trend

The Zacks Consensus Estimate for Insteel Industries’ fiscal 2025 earnings is pegged at $1.86 per share, indicating an increase of 34.8% over the past 60 days. The figure also indicates year-over-year growth of 87.9%. The consensus estimate for fiscal 2026 earnings stands at $2.98 per share, stable over the past 60 days. The figure indicates year-over-year growth of 60.2%.

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Valuation Remains an Overhang

Despite the positives, IIIN’s lofty valuation remains a concern. The stock is trading at a forward 12-month price-to-earnings (P/E) ratio of 13.59X, higher than the industry average of 10.99X. In contrast, the company’s peers, Atkore and Belden, are trading at 11.18X and 14.04X, respectively. This elevated valuation could make the stock vulnerable to further pullbacks if market sentiment sours.

Price-to-Earnings (Forward 12 Months)

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Should You Buy IIIN’s Stock Now?

Solid momentum in the non-residential construction market, accretive acquisitions and growth investments position Insteel Industries favorably for strong growth in the quarters ahead. IIIN’s shareholder-friendly policies are also encouraging.

Despite its expensive valuation, positive analyst sentiment and robust growth prospects indicate it is the right time for potential investors to bet on this Zacks Rank #2 (Buy) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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