Commercial Metals Company (NYSE: CMC) is showing signs of rebound and is poised for double-digit growth this year. Despite falling selling prices, the company’s margins are improving, and it has a strong cash flow. Analysts believe that the company’s solid footing, healthy cash flow, and potential for sustainable growth make it an attractive investment option.
Key Points
1. Commercial Metals Company has rebounded and is expected to see double-digit growth this year, despite falling selling prices and concerns over demand. The company’s Q3 results demonstrate its resilience and solid underlying demand in most segments.
2. The company is on solid footing, with improving margins, strong cash flow, and a low level of leverage. While it does not offer a large dividend or share repurchases, the combined returns work out to more than 2.25% annually. The company is expected to extend its history of annual distribution increases.
3. Commercial Metals Company reported a solid quarter, with net revenue of $2.34 billion, surpassing expectations. North American activity is supported by construction related to reshoring supply chains and government spending. The company’s margin news is positive, with costs falling sequentially and an increase in core EBITDA and adjusted earnings. The outlook suggests sequential growth in revenue and earnings.
Commercial Metals Company (CMC) is showing signs of rebounding and could potentially see double-digit gains this year. Despite falling selling prices and concerns over demand, the company’s Q3 results indicate a strong underlying demand in most sectors. The decrease in metals prices is being offset by improved margins, leading to a solid bottom-line beat. CMC generates healthy cash flow and is expected to drive shareholder value. Although the company does not pay a large dividend or repurchase shares in large amounts, the combined returns still amount to over 2.25% annually.
With low leverage and a payout ratio of less than 10%, there is an expectation for continued distribution growth. In addition, the company has been able to repay a substantial amount of debt in the recent quarter and has a robust cash position of $475 million. Looking ahead, CMC’s outlook includes a double-digit increase in North American New Bid activity and a rising downstream backlog, indicating potential growth in revenue and earnings. While analysts currently rate the stock as a Hold, their price target suggests upside potential of around 9%.
The stock’s chart also shows promise, with a bottom formation around the $44 level. AlphaBetaStock.com, a leading research analyst platform, has identified five stocks that top analysts recommend as better buys than CMC. However, despite this, CMC is still expected to continue its upward trend and could potentially reach new all-time highs, offering a potential gain of at least 14%.
