Commercial Metals (NYSE:CMC) - Share price, News & Analysis

Q: What is the Fair Price of CMC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

CMC ($36.07) is trading below our estimate of [[fair value]] ($51.07)

CMC fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	0/6
Past Performance	5/6
Financial Health	6/6
Dividends	3/6

CMC Stock Overview

Commercial Metals Company manufactures, recycles, and fabricates steel and metal products, and related materials and services in the United States, Poland, China, and internationally.

Rewards

Trading at 29.4% below our estimate of its fair value

Earnings grew by 229.2% over the past year

Risk Analysis

Earnings are forecast to decline by an average of 33% per year for the next 3 years

High level of non-cash earnings

Commercial Metals Competitors

United States Steel

NYSE:X

US$5.1b

Grupo Simec. de

NYSEAM:SIM

US$4.6b

Ternium

NYSE:TX

US$7.4b

Worthington Industries

NYSE:WOR

US$2.3b

Price History & Performance

Summary of all time highs, changes and price drops for Commercial Metals
Historical stock prices
Current Share Price	US$36.07
52 Week High	US$46.68
52 Week Low	US$28.77
Beta	1.13
1 Month Change	-12.77%
3 Month Change	-12.71%
1 Year Change	17.11%
3 Year Change	99.95%
5 Year Change	80.80%
Change since IPO	1,648.84%

Recent News & Updates

Jun 18

Commercial Metals Company: Risks Of A Recession Outweigh The Rewards

Commercial Metals Company has been posting promising results for the past few quarters, especially with the support of rising steel prices. The company has been improving its profitability but there is still a lot of room for improvement. Steel prices are precedented to tank in times of economic crisis and have recently started falling amid looming threats of a recession. If the recession hits and steel prices steeply decline, CMC stock will be seriously affected, making me rate the stock as a "HOLD."

Shareholder Returns

	CMC	US Metals and Mining	US Market
7D	-1.1%	-2.4%	6.6%
1Y	17.1%	-9.0%	-18.4%

Return vs Industry: CMC exceeded the US Metals and Mining industry which returned -9% over the past year.

Return vs Market: CMC exceeded the US Market which returned -18.4% over the past year.

Price Volatility

Is CMC's price volatile compared to industry and market?
CMC volatility
CMC Average Weekly Movement	6.7%
Metals and Mining Industry Average Movement	9.9%
Market Average Movement	8.1%
10% most volatile stocks in US Market	16.6%
10% least volatile stocks in US Market	3.2%

Stable Share Price: CMC is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: CMC's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1915	11,089	Barbara Smith	https://www.cmc.com

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.

Commercial Metals Fundamentals Summary

How do Commercial Metals's earnings and revenue compare to its market cap?
CMC fundamental statistics
Market Cap	US$4.35b
Earnings (TTM)	US$1.08b
Revenue (TTM)	US$8.54b

4.0x

P/E Ratio

0.5x

P/S Ratio

Is CMC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
CMC income statement (TTM)
Revenue	US$8.54b
Cost of Revenue	US$6.84b
Gross Profit	US$1.69b
Other Expenses	US$611.31m
Earnings	US$1.08b

Last Reported Earnings

May 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	8.97
Gross Margin	19.82%
Net Profit Margin	12.66%
Debt/Equity Ratio	47.2%

How did CMC perform over the long term?

See historical performance and comparison

Dividends

1.6%

Current Dividend Yield

6%

Payout Ratio

Does CMC pay a reliable dividends?

See CMC dividend history and benchmarks

When do you need to buy CMC by to receive an upcoming dividend?
Commercial Metals dividend dates
Ex Dividend Date	Jun 28 2022
Dividend Pay Date	Jul 13 2022
Days until Ex dividend	0 days
Days until Dividend pay date	15 days

Does CMC pay a reliable dividends?

See CMC dividend history and benchmarks

We’ve recently updated our valuation analysis.

Valuation

Is CMC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for CMC?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for CMC. This is calculated by dividing CMC's market cap by their current preferred multiple.
What is CMC's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$4.35b

CMC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.7x
Enterprise Value/EBITDA	4.2x
PEG Ratio	-0.1x

Price to Earnings Ratio vs Peers

How does CMC's PE Ratio compare to its peers?

CMC PE Ratio vs Peers

The above table shows the PE ratio for CMC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	4.7x
X United States Steel	1x	-58.8%	US$5.1b
SIM Grupo Simec. de	9.9x	-4.7%	US$4.6b
TX Ternium	1.8x	-22.6%	US$7.4b
WOR Worthington Industries	5.9x	-17.0%	US$2.3b
CMC Commercial Metals	4x	-33.0%	US$4.3b

Forward PE

Price-To-Earnings vs Peers: CMC is good value based on its Price-To-Earnings Ratio (4x) compared to the peer average (4.7x).

Price to Earnings Ratio vs Industry

How does CMC's PE Ratio compare vs other companies in the US Metals and Mining Industry?

Price-To-Earnings vs Industry: CMC is good value based on its Price-To-Earnings Ratio (4x) compared to the US Metals and Mining industry average (8.1x)

Price to Earnings Ratio vs Fair Ratio

What is CMC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

CMC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	4x
Fair PE Ratio	6.3x

Price-To-Earnings vs Fair Ratio: CMC is good value based on its Price-To-Earnings Ratio (4x) compared to the estimated Fair Price-To-Earnings Ratio (6.3x).

Share Price vs Fair Value

What is the Fair Price of CMC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: CMC ($36.07) is trading below our estimate of fair value ($51.07)

Significantly Below Fair Value: CMC is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: CMC's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

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Future Growth

How is Commercial Metals forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-33.0%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: CMC's earnings are forecast to decline over the next 3 years (-33% per year).

Earnings vs Market: CMC's earnings are forecast to decline over the next 3 years (-33% per year).

High Growth Earnings: CMC's earnings are forecast to decline over the next 3 years.

Revenue vs Market: CMC's revenue is expected to decline over the next 3 years (-7.2% per year).

High Growth Revenue: CMC's revenue is forecast to decline over the next 3 years (-7.2% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: CMC's Return on Equity is forecast to be low in 3 years time (13.7%).

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Past Performance

How has Commercial Metals performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

50.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CMC has a high level of non-cash earnings.

Growing Profit Margin: CMC's current net profit margins (12.7%) are higher than last year (5.4%).

Past Earnings Growth Analysis

Earnings Trend: CMC's earnings have grown significantly by 50.7% per year over the past 5 years.

Accelerating Growth: CMC's earnings growth over the past year (229.2%) exceeds its 5-year average (50.7% per year).

Earnings vs Industry: CMC earnings growth over the past year (229.2%) exceeded the Metals and Mining industry 94.3%.

Return on Equity

High ROE: CMC's Return on Equity (34.4%) is considered high.

Discover strong past performing companies

Financial Health

How is Commercial Metals's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: CMC's short term assets ($3.4B) exceed its short term liabilities ($1.4B).

Long Term Liabilities: CMC's short term assets ($3.4B) exceed its long term liabilities ($1.6B).

Debt to Equity History and Analysis

Debt Level: CMC's net debt to equity ratio (34.2%) is considered satisfactory.

Reducing Debt: CMC's debt to equity ratio has reduced from 74.8% to 47.2% over the past 5 years.

Debt Coverage: CMC's debt is well covered by operating cash flow (25.3%).

Interest Coverage: CMC's interest payments on its debt are well covered by EBIT (24.5x coverage).

Balance Sheet

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Dividend

What is Commercial Metals's current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

1.55%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: CMC's dividend (1.55%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.57%).

High Dividend: CMC's dividend (1.55%) is low compared to the top 25% of dividend payers in the US market (4.23%).

Stability and Growth of Payments

Stable Dividend: CMC's dividends per share have been stable in the past 10 years.

Growing Dividend: CMC's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (6.1%), CMC's dividend payments are thoroughly covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (271.3%), CMC's dividend payments are not well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

2.4yrs

Average management tenure

CEO

Barbara Smith (62 yo)

5.42yrs

Tenure

US$9,054,252

Compensation

Ms. Barbara R. Smith, CPA., has been the President and Chief Executive Officer of Commercial Metals Company (CMC) since January 11, 2017 and September 1, 2017 respectively. Ms. Smith has been the Chairman...

CEO Compensation Analysis

Compensation vs Market: Barbara's total compensation ($USD9.05M) is above average for companies of similar size in the US market ($USD6.87M).

Compensation vs Earnings: Barbara's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: CMC's management team is considered experienced (2.4 years average tenure).

Board Members

Experienced Board: CMC's board of directors are considered experienced (4.8 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: CMC insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/27 00:00
End of Day Share Price	2022/06/27 00:00
Earnings	2022/05/31
Annual Earnings	2021/08/31