Friedman Industries (FRD) Q3 2026 Net Margin Improvement Tests Bearish Cash Flow Narratives

Friedman Industries Q3 2026 Earnings Snapshot

Friedman Industries (FRD) has reported Q3 2026 results with total revenue of US$168.0 million, net income of US$3.0 million and basic EPS of US$0.43, setting the tone for another data heavy quarter for investors to assess. The company has seen quarterly revenue move from US$106.8 million in Q2 2025 to US$94.1 million in Q3 2025, then to US$129.2 million in Q4 2025, US$134.8 million in Q1 2026, US$152.4 million in Q2 2026 and US$168.0 million in Q3 2026. Basic EPS tracked from a loss of US$0.10 in Q2 2025 to a loss of US$0.17 in Q3 2025, then to US$0.76, US$0.71, US$0.32 and US$0.43 over the same periods. With trailing net profit margins at 2.6% and a clear progression in reported EPS, this set of numbers gives investors plenty to weigh up around how sustainable Friedman Industries profitability profile might be.

See our full analysis for Friedman Industries.

With the raw results on the table, the next step is to set these figures against the widely followed Friedman Industries narratives to see which themes line up with the numbers and which ones get pushed back.

Curious how numbers become stories that shape markets? Explore Community Narratives

Trailing Net Margin Edges Up To 2.6%

• Over the last 12 months Friedman earned US$15.5 million on US$584.4 million of revenue, which works out to a 2.6% net profit margin compared with 1.3% a year earlier.
• What stands out for the more optimistic view is that trailing earnings growth of 174.1% sits alongside a five year annualized earnings change of 9.6% decline, so:
  • Supporters can point to recent quarters like Q3 2026, where net income of US$3.0 million and EPS of about US$0.43 add to that trailing upswing.
  • On the other hand, the longer term 9.6% annualized earnings decline keeps the bullish case grounded in the reality that this recent margin level has not been the norm over five years.

Over the last few quarters, that mix of a 2.6% margin and a history of weaker earnings is exactly what long term bulls are trying to make sense of. 📊 Read the full Friedman Industries Consensus Narrative.

P/E Of 9.8x Versus Industry Above 27x

• The stock trades on a trailing P/E of 9.8x, which is below the US Metals & Mining industry at 27.3x, below a 33.8x peer average, and also below the broader US market at 19.5x.
• Supporters of a more bullish angle see that gap as a potential value signal. Yet the numbers leave room for pushback:
  • The trailing 12 month EPS of US$2.22 helps explain why some investors compare the current US$21.31 share price to a relatively low P/E level versus peers.
  • At the same time, the 2.6% margin and the history of 9.6% annualized earnings decline over five years mean the low P/E sits beside mixed earnings quality, so the bullish read on the multiple is not straightforward.

DCF Fair Value Points To A Big Gap

• A DCF based estimate puts fair value at US$3.13 per share, while the current share price is US$21.31, so the stock is trading at a level that is many times the DCF fair value, and the trailing data also flags that debt is not well covered by operating cash flow.
• For a more cautious, bearish style narrative, this combination is important because:
  • Critics can highlight that even though trailing earnings grew 174.1% and the P/E looks low next to peers, the large gap between price and the DCF fair value gives them a clear valuation concern to point to.
  • They can also point to the debt coverage issue on trailing cash flow as a sign that the 2.6% margin and US$15.5 million of trailing net income sit alongside balance sheet and cash generation questions, which fits a more defensive stance.

Skeptical investors who focus on that DCF fair value and debt coverage angle may want a deeper breakdown of the risks and how sensitive the story is to future cash generation. 🐻 Friedman Industries Bear Case

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Friedman Industries's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Friedman Industries combines a 2.6% net margin and a five year annualized earnings decline with a DCF estimate that sits far below its current share price.

If those mixed earnings trends and valuation gap leave you unconvinced, it could be worth scanning our 51 high quality undervalued stocks to find companies where price and fundamentals line up more closely.

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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