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1. Company Snapshot

1.a. Company Description

Commercial Metals Company manufactures, recycles, and fabricates steel and metal products, and related materials and services in the United States, Poland, China, and internationally.The company processes and sells ferrous and nonferrous scrap metals to steel mills and foundries, aluminum sheet and ingot manufacturers, brass and bronze ingot makers, copper refineries and mills, secondary lead smelters, specialty steel mills, high temperature alloy manufacturers, and other consumers.It also manufactures and sells finished long steel products, including rebar, merchant bar, light structural, and other special sections, as well as semi-finished billets for re-rolling and forging applications.


In addition, the company provides fabricated steel products used to reinforce concrete primarily in the construction of commercial and non-commercial buildings, hospitals, convention centers, industrial plants, power plants, highways, bridges, arenas, stadiums, and dams; sells and rents construction-related products and equipment to concrete installers and other businesses; and manufactures and sells strength bars for the truck trailer industry, special bar steels for the energy market, and armor plates for military vehicles.Further, it manufactures rebars, merchant bars, and wire rods; and sells fabricated rebars, wire meshes, fabricated meshes, assembled rebar cages, and other fabricated rebar by-products to fabricators, manufacturers, distributors, and construction companies.The company was founded in 1915 and is headquartered in Irving, Texas.

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1.b. Last Insights on CMC

Commercial Metals Company's recent performance was driven by strong Q4 earnings and revenue growth. The company's net earnings reached $151.8 million, with adjusted earnings of $1.37 per diluted share, beating estimates. Its Emerging Businesses Group achieved record results, driven by Tensar's performance. The Arizona 2 micro mill generated positive adjusted EBITDA. A new $1.84B acquisition boosted growth prospects. Earnings estimates have been revised upward, indicating potential for continued growth. The company's Transform, Advance, and Grow program exceeded expectations, positioning it for long-term value-accretive growth.

1.c. Company Highlights

2. Commercial Metals Company's Strategic Acquisition and Strong Q4 Earnings

Commercial Metals Company (CMC) reported a strong quarterly performance with net earnings of $151.8 million or $1.35 per diluted share, compared to $103.9 million or $0.90 per diluted share in the prior year period. Adjusted earnings for the quarter were $155 million or $1.37 per diluted share, beating analyst estimates of $1.32. The company's revenue growth was robust, driven by its North American Steel Group, which saw a significant sequential expansion in margins during the quarter, achieving the highest level in two years. The group's margin improvement was partially driven by price announcements, with realized pricing increasing steadily throughout the quarter.

Publication Date: Oct -17

📋 Highlights
  • Acquisition Synergy and Scale:: CMC's $2.5 billion acquisition of Foley, combined with CPMP, creates a $250 million EBITDA precast platform with 35 facilities across 14 states, positioning as the US’s third-largest precast player and driving $25–30 million annual EBITDA synergies by year three.
  • Margin and Free Cash Flow Growth:: Foley’s 34%+ EBITDA margins and CPMP’s integration are expected to elevate CMC’s margin levels, with precast synergies boosting free cash flow and reducing earnings volatility, while net debt is projected to drop from 2.7x to 2x EBITDA within 18 months.
  • Tax Advantages and Earnings Strength:: CMC secured an $80 million tax credit under the 48C program and anticipates a 4–8% effective tax rate in 2026, avoiding significant U.S. federal cash taxes for fiscal 2026–2027 due to credits and depreciation, supporting adjusted earnings of $1.37/share in the latest quarter.
  • Precast Market Leadership:: The combined precast business, with $250 million EBITDA, leverages high barriers to entry (e.g., $10–15 million annual maintenance CapEx) and above-GDP growth potential, targeting several $100 million EBITDA through M&A and organic projects addressing labor shortages and stormwater management.
  • Steel Group Margin Expansion:: CMC’s North American Steel Group achieved two-year-high margins in the latest quarter, driven by June–July price hikes and sequential improvement, with 2026 guidance projecting higher steel product margins over scrap and sustained bid volumes amid a resilient construction market.

Acquisition of Foley Products Company

CMC's acquisition of Foley Products Company, a leading precast producer in the US, is expected to increase its value proposition for customers and shareholders. The deal, valued at $2.5 billion, is expected to be immediately accretive to earnings and cash flow per share. The combined precast platform will be the third-largest player in the US, supported by 35 facilities across 14 states. CMC expects annual run-rate synergies of $25-30 million of EBITDA by year three, which will help drive growth and increase margin levels.

Segment Performance

The Emerging Businesses Group saw record segment profitability during the quarter, with shipments of core solutions increasing from the prior year. The segment is expected to achieve a consistent organic growth rate in the mid to high single digits and EBITDA margins in the high teens. The Europe Steel Group saw improved profitability, driven by a $31 million CO2 credit and operational results that improved by $11.7 million.

Outlook and Valuation

CMC expects consolidated financial results in 2026 to be generally consistent with those of the fourth quarter. The company's guidance for fiscal 2026 includes a full-year effective tax rate between 4-8% and total capital spending of approximately $600 million. With a current P/E Ratio of 75.69 and EV/EBITDA of 15.34, the market is pricing in significant growth expectations. Analysts estimate next year's revenue growth at 10.1%, which may justify the current valuation multiples. The company's ROIC of 6.87% and ROE of 2.08% indicate a relatively efficient use of capital. The Net Debt / EBITDA ratio is expected to increase to approximately 2.7 times post-acquisition but is expected to return to the long-term target of two times within 18 months.

Growth Prospects

CMC is well-positioned for growth, driven by its recent acquisitions and emerging businesses. The company's precast business is expected to grow to several $100 million in EBITDA, driven by above-average growth and solving labor shortage and stormwater management issues. The maintenance CapEx for the acquired businesses is relatively low, ranging from $8-15 million. With a strong cash flow generation, CMC is expected to reduce its leverage and resume share repurchases once its leverage is back down below two times target.

3. NewsRoom

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Best Growth Stocks to Buy for Dec.4

Dec -04

Source: zacks.com

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Commercial Metals Boosts Portfolio With Acquisition of CP&P

Dec -02

Source: zacks.com

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Best Growth Stocks to Buy for Dec.2

Dec -02

Source: zacks.com

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Commercial Metals Completes Acquisition of Concrete Pipe & Precast, LLC

Dec -01

Source: prnewswire.com

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Top 4 Low-PEG Value Stocks Ready to Outperform the Market

Dec -01

Source: zacks.com

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Fast-paced Momentum Stock Commercial Metals (CMC) Is Still Trading at a Bargain

Dec -01

Source: zacks.com

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Boston Partners Decreases Stake in Commercial Metals Company $CMC

Nov -27

Source: defenseworld.net

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Commercial Metals Company Announces Closing of $2,000 Million Senior Notes Offering

Nov -26

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

North America

Expected Growth: 4.83%

North America's 4.83% growth in Commercial Metals Company is driven by increasing demand for steel products in construction and infrastructure projects, supported by government investments in transportation and energy infrastructure. Additionally, a strong recovery in the automotive sector and growing demand for recycled metals also contribute to this growth.

Europe

Expected Growth: 4.83%

Europe's 4.83% growth for Commercial Metals Company is driven by increasing demand for steel products from the construction and automotive sectors, supported by government infrastructure investments and a rebound in industrial production. Additionally, the region's focus on renewable energy and sustainable infrastructure projects contributes to the growth.

Corporate and Other

Expected Growth: 4.83%

The 4.83% growth in Corporate and Other segment of Commercial Metals Company is driven by increased demand for steel products, strategic acquisitions, and cost savings initiatives. Additionally, the company's focus on operational efficiency, pricing discipline, and investment in growth projects have contributed to the segment's growth.

7. Detailed Products

Rebar

Reinforcing steel bars used to add strength and stability to concrete structures

Merchant Bar

A range of steel products including angles, channels, flats, and rounds

Wire Rod

Steel rod used to manufacture wire products such as nails, screws, and fencing

Recycled Metals

Recycled metals processed from scrap metal, including copper, aluminum, and steel

Fabricated Rebar

Custom-fabricated rebar products for specific construction projects

Steel Fence Posts

Steel posts used for fencing applications in agriculture, construction, and security

8. Commercial Metals Company's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Commercial Metals Company is medium due to the availability of alternative materials and products that can replace steel and metal products.

Bargaining Power Of Customers

The bargaining power of customers for Commercial Metals Company is low due to the company's diverse customer base and lack of concentration of customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Commercial Metals Company is medium due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for Commercial Metals Company is low due to the high barriers to entry in the steel and metal products industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Commercial Metals Company is high due to the competitive nature of the steel and metal products industry, with multiple players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 21.89%
Debt Cost 4.53%
Equity Weight 78.11%
Equity Cost 10.66%
WACC 9.32%
Leverage 28.02%

11. Quality Control: Commercial Metals Company passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
NewMarket

A-Score: 6.7/10

Value: 4.5

Growth: 7.2

Quality: 7.2

Yield: 3.0

Momentum: 9.5

Volatility: 8.7

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Reliance Steel & Aluminum

A-Score: 5.3/10

Value: 4.6

Growth: 6.1

Quality: 5.6

Yield: 3.0

Momentum: 4.0

Volatility: 8.7

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Boise Cascade

A-Score: 5.1/10

Value: 6.8

Growth: 5.8

Quality: 5.6

Yield: 6.0

Momentum: 0.5

Volatility: 6.0

1-Year Total Return ->

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Steel Dynamics

A-Score: 4.9/10

Value: 3.4

Growth: 7.1

Quality: 5.1

Yield: 2.0

Momentum: 6.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
CMC

A-Score: 4.4/10

Value: 3.9

Growth: 3.8

Quality: 4.5

Yield: 2.0

Momentum: 6.0

Volatility: 6.3

1-Year Total Return ->

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Cleveland-Cliffs

A-Score: 3.6/10

Value: 9.2

Growth: 3.1

Quality: 3.5

Yield: 0.0

Momentum: 4.0

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

66.86$

Current Price

66.86$

Potential

-0.00%

Expected Cash-Flows