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Commercial Metals Company (CMC)
NYSE:CMC
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Commercial Metals Company
(NYSE:CMC)
66Neutral
Positive Factors
Earnings
3Q FY25 earnings are expected to increase, largely due to rising North American shipments and margins.
European Market
Management highlighted the developing potential tailwinds in the European business, including increased inflows for major infrastructure projects and positive economic developments in Poland and Germany.
Strategic Initiatives
Management discussed the company’s Transform, Advance, and Grow (TAG) cost-cutting initiative, which includes over 150 projects to structurally improve margins.
Negative Factors
Cash Flow
Lower earnings and a seasonal build in working capital led to negative free cash flow for CMC during the quarter.
North American Market
Margins in the North American segment are expected to continue to decline in 2Q, while shipments should follow normal seasonal trends.
Valuation Concerns
A rich valuation and potential downward revisions to consensus estimates due to lower prices lead to an equal weight rating.
Commercial Metals Company (CMC) vs. S&P 500 (SPY)
Market Cap
$4.63B
Dividend Yield1.76%
Average Volume (3M)1.42M
Price to Earnings (P/E)68.0
Beta (1Y)1.26
Revenue Growth-7.93%
EPS Growth-89.29%
CountryUS
Employees13,178
SectorBasic Materials
Sector Strength57
IndustrySteel
Share Statistics
EPS (TTM)0.60
Shares Outstanding113,000,580
10 Day Avg. Volume1,369,038
30 Day Avg. Volume1,419,420
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.68
Price to Cash Flow (P/CF)6.20
P/FCF Ratio5.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$57.17Price Target Upside40.61% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Commercial Metals Company Business Overview & Revenue Model
Company DescriptionCommercial Metals Company (CMC) is a global leader in the manufacturing, recycling, and marketing of steel and metal products. With operations spanning across North America and Europe, CMC serves various industries including construction, manufacturing, and infrastructure. The company offers a diverse range of products such as rebar, merchant bar, wire rod, and structural steel, as well as providing metal recycling services through its extensive network of facilities.
How the Company Makes MoneyCommercial Metals Company generates revenue through several key streams: the sale of steel and metal products, metal recycling services, and fabrication services. The company operates steel mills, mini-mills, and fabricating plants that produce a wide variety of steel products which are sold to construction companies, manufacturers, and other industrial clients. CMC's recycling segment collects, processes, and resells scrap metal, providing raw materials for its steel production and generating additional revenue. Strategic partnerships and a strong supply chain further enhance CMC's market reach and profitability. The company's earnings are influenced by factors such as steel demand, commodity prices, and operational efficiency.
Commercial Metals Company Financial Statement Overview
Summary
Commercial Metals Company exhibits strong operational efficiency and a solid balance sheet with low leverage. However, profitability has weakened, as reflected in declining net profit margins and inconsistent revenue growth. Cash flow generation remains strong, though recent declines in free cash flow growth suggest potential liquidity risks. The company is well-positioned but must address profitability challenges to sustain growth.Income Statement
The company demonstrates a strong gross profit margin of 35.45% TTM, reflecting efficient cost management in production. However, the net profit margin has declined significantly to 0.95% TTM, indicating increased expenses or reduced revenue. Revenue growth has been inconsistent, with a decline of 10.88% in the latest annual report. The EBIT margin is robust at 24.98% TTM, suggesting good operational efficiency.75
Positive
Balance Sheet
The balance sheet is strong with a low debt-to-equity ratio of 0.30, indicating low leverage and financial stability. Return on equity is modest at 1.82% TTM, showing room for improvement in profitability. The equity ratio stands at 59.99% TTM, suggesting a solid capital structure with a good portion of assets financed by equity.80
Positive
Cash Flow
Operating cash flow to net income ratio is high at 10.87 TTM, reflecting strong cash generation relative to profits. Free cash flow growth is negative at -25.75%, indicating potential challenges in maintaining liquidity. The free cash flow to net income ratio is 5.84 TTM, showing efficient conversion of earnings into cash.70
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 7.74B | 7.93B | 8.80B | 8.91B | 6.73B | 5.48B | Gross Profit |
| 1.21B | 1.36B | 1.81B | 1.86B | 1.11B | 944.80M | EBIT |
| 346.37M | 693.60M | 1.17B | 1.31B | 600.74M | 441.02M | EBITDA |
| 429.51M | 963.93M | 1.39B | 1.49B | 753.53M | 598.37M | Net Income Common Stockholders |
| 73.13M | 485.49M | 859.76M | 1.22B | 412.87M | 279.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 758.40M | 857.92M | 592.33M | 672.60M | 497.75M | 542.10M | Total Assets |
| 6.69B | 6.82B | 6.64B | 6.24B | 4.64B | 4.08B | Total Debt |
| 1.19B | 1.19B | 1.15B | 1.50B | 1.07B | 1.08B | Net Debt |
| 436.37M | 331.70M | 562.47M | 829.45M | 572.04M | 541.58M | Total Liabilities |
| 2.68B | 2.52B | 2.52B | 2.95B | 2.34B | 2.19B | Stockholders Equity |
| 4.01B | 4.30B | 4.12B | 3.29B | 2.29B | 1.89B |
| Cash Flow | Free Cash Flow | ||||
| 427.20M | 575.44M | 737.44M | 250.32M | 44.31M | 603.59M | Operating Cash Flow |
| 795.15M | 899.71M | 1.34B | 700.31M | 228.47M | 791.20M | Investing Cash Flow |
| -339.68M | -323.00M | -835.23M | -684.72M | -162.13M | -192.94M | Financing Cash Flow |
| -335.95M | -313.76M | -599.48M | 165.31M | -109.39M | -247.79M |
Commercial Metals Company Technical Analysis
Negative
40.66
Price Trends
47.66
Negative
51.34
Negative
52.49
Negative
Market Momentum
-0.30
Negative
48.60
Neutral
34.74
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CMC, the sentiment is Negative. The current price of 40.66 is below the 20-day moving average (MA) of 45.74, below the 50-day MA of 47.66, and below the 200-day MA of 52.49, indicating a bearish trend. The MACD of -0.30 indicates Negative momentum. The RSI at 48.60 is Neutral, neither overbought nor oversold. The STOCH value of 34.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CMC.
Commercial Metals Company Risk Analysis
Commercial Metals Company disclosed 36 risk factors in its most recent earnings report. Commercial Metals Company reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Commercial Metals Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $5.24B | 6.34 | 8.98% | 5.37% | -9.51% | -45.87% | |
73 Outperform | $16.37B | 11.09 | 17.27% | 1.72% | -6.68% | -32.96% | |
71 Outperform | $23.82B | 12.20 | 9.79% | 2.11% | -11.46% | -53.33% | |
66 Neutral | $4.63B | 68.01 | 1.78% | 1.76% | -7.93% | -89.29% | |
62 Neutral | $5.54B | 73.52 | -0.44% | 10.99% | 0.81% | -108.00% | |
60 Neutral | $8.67B | 24.50 | 3.43% | 0.52% | -13.48% | -56.94% | |
47 Neutral | $2.35B | -2.91 | -21.55% | 3.59% | 4.17% | -28.20% |
* Basic Materials Sector Average
Performance Comparison
CMC
Commercial Metals Company
40.66
-16.78
-29.21%
GGB
Gerdau SA
2.46
-1.21
-32.97%
NUE
Nucor
104.97
-91.67
-46.62%
STLD
Steel Dynamics
111.04
-33.44
-23.15%
TX
Ternium SA
26.50
-14.13
-34.78%
X
United States Steel
44.50
2.78
6.66%
Commercial Metals Company Earnings Call Summary
Earnings Call Date: Mar 20, 2025 | % Change Since: -12.90% | Next Earnings Date: Jun 19, 2025
Earnings Call Sentiment Neutral
While CMC faced challenges such as a decline in net earnings and economic uncertainty affecting its North American Steel Group, the call highlighted significant achievements including record low incident rates, improved performance in the Europe Steel Group, and strong demand in the Emerging Businesses Group. The company's strategic initiatives and anticipated improvements in market conditions suggest a cautiously optimistic outlook.Highlights
Record Low Incident Rate
CMC achieved a record low incident rate consistent with world-class performance, and the number of OSHA recordable events was the lowest since the second half of fiscal 2018, despite having nearly 4,500 more employees.
Improvement in Europe Steel Group
The Europe Steel Group achieved a breakeven performance, marking an improvement both sequentially and year-over-year when energy cost rebates are excluded.
Strong Demand in Emerging Businesses Group
Profitability for CMC's Emerging Businesses Group increased sequentially and compared to the year-ago period, driven by strong demand for its proprietary corrosion-resistant solutions.
Growing Backlog in North America
CMC experienced the second highest volume of new project awards since late fiscal 2022, leading to a healthy sequential increase in downstream backlog.
Improved Market Conditions and Metal Margins
Improved scrap market conditions and an inflection in long steel price levels indicate a floor in steel product metal margins, with expected expansion heading into the third and fourth quarters.
Lowlights
Decline in Net Earnings
CMC reported net earnings for the second quarter of $25.5 million, down from $85.8 million in the prior-year period.
Economic Uncertainty Impacting North American Steel Group
Economic uncertainty affected the North American Steel Group, impacting steel pricing and slowing the pace of new construction project awards.
Challenges in Arizona 2 Micro Mill
The Arizona 2 micro mill did not achieve breakeven in the second quarter due to transformer outages and startup issues.
Company Guidance
During the CMC's Fiscal 2025 Second Quarter Earnings Call, the company reported net earnings of $25.5 million, or $0.22 per diluted share, with net sales amounting to $1.8 billion. Adjusted earnings, excluding after-tax charges of $3.9 million, were $29.3 million or $0.26 per diluted share. The North American Steel Group achieved an adjusted EBITDA of $128.8 million, equivalent to $123 per ton of finished steel shipped, despite lower margins over scrap. The Europe Steel Group reported a breakeven performance, showing improvement from the previous year, while the Emerging Businesses Group saw a 31% increase in adjusted EBITDA, reaching $23.5 million. CMC anticipates consolidated financial results to improve in the third quarter of fiscal 2025, with expectations of higher margins over scrap and continued strong demand in North America. The company's strategic growth initiatives, including operational and commercial excellence programs and organic and inorganic growth projects, are expected to drive future value and returns, with anticipated capital expenditures between $550 million and $600 million for fiscal 2025.Commercial Metals Company Corporate Events
Business Operations and StrategyFinancial Disclosures
Commercial Metals Reports Q2 2025 Financial Results
Neutral
Mar 20, 2025
On March 20, 2025, Commercial Metals Company reported its financial results for the second quarter of fiscal year 2025, highlighting net earnings of $25.5 million on net sales of $1.8 billion. The company experienced a 3.3% increase in finished steel shipments in North America due to strong construction demand, while its Europe Steel Group achieved breakeven adjusted EBITDA through effective cost management. Despite a decrease in adjusted EBITDA for the North America Steel Group, the company anticipates improved profitability in the upcoming quarters, driven by infrastructure spending and strategic initiatives like the Transform, Advance, and Grow program.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.