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Here's Why You Should Bet on Commercial Metals (CMC) Stock Now
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Commercial Metals Company (CMC - Free Report) is gaining from forecast-beating third-quarter fiscal 2021 results as well as robust steel demand, driven by strong construction and infrastructure activities. Moreover, the company’s focus on price-rise actions and financial strength position it as an attractive investment option.
The company currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let's delve deeper into the factors that make the Commercial Metals stock a compelling investment option at the moment.
Earnings & Sales Top Estimates in Q3
Commercial Metals’ third-quarter fiscal 2021 adjusted earnings per share came in at $1.04, beating the Zacks Consensus Estimate of 81 cents. The bottom-line figure surged 76.2% year on year on robust demand for the company’s products. Net sales of $1,845 million also surpassed the consensus mark of $1,719 million and increased 37.5% year over year.
Positive Earnings Surprise Trend
The company has a trailing four-quarter average earnings surprise of 17.5%. Over the past five years, the company has generated earnings growth of 22.3%.
Impressive Price Performance
The company’s shares have gained 50.2% so far this year, outperforming the industry’s growth of 43.2%.
Image Source: Zacks Investment Research
Upbeat Growth Projections
The Zacks Consensus Estimate for fiscal 2021 earnings per share is currently pegged at $2.85, indicating growth of 7.9% from the prior year. The same has moved up 6.7% over the past 30 days.
Solid Financial Position
Commercial Metals’ solid liquidity, financial position and focus on reducing debt will stoke growth. The company had a credit capacity of $639 million at the end of the fiscal third quarter, with cash in hand of $443 million. During third-quarter fiscal 2021, the company increased the revolving credit facility to $400 million from $350 million. Also, its net debt to trailing 12-month adjusted EBITDA ratio stood at 1.0 at the end of the fiscal third quarter, while net debt to capitalization is just 20%.
Other Growth Drivers
Commercial Metals continues to witness stellar demand for steel products across most of its end markets. Strong recovery in industrial activities in the United States is driving demand for merchant products, while solid demand from industrial customers in Central Europe is translating into robust demand for merchant bar and wire rod products. Meanwhile, elevated spending in the residential and highway infrastructure activities are spurring strong rebar demand in the United States and Europe. In fact, solid bidding and construction backlog will provide strength in the near term. These factors will likely support robust finished steel shipment levels in North America and Europe during the fiscal fourth quarter and the subsequent quarters as well.
Commercial Metals continues to gain from its ongoing network optimization efforts, which will yield additional margin and reduce costs in the near future. Apart from this, Commercial Metals is progressing well with construction of a third micro mill in Arizona, which will be the world's first mill to produce merchant bar quality (MBQ) steel products.
Moreover, the company is implementing price rise across its mill products in response to the rapidly-rising scrap costs. Management anticipates that its capacity-curtailment initiative at the West Coast fabrication facility to support the company’s network-optimization efforts will provide cost benefits in the days to come. This January, the company closed its Steel California operations and transitioned the supply chain for the California market to lower-cost material produced in the Central and East regions.
Other Stocks to Consider
Other top-ranked stocks in the basic materials space include Univar Solutions Inc. , Nucor Corporation (NUE - Free Report) and Cabot Corporation (CBT - Free Report) , each sporting a Zacks Rank #1, at present.
Univar has a projected earnings growth rate of 35.2% for 2021. The company’s shares have rallied around 53% in a year’s time.
Nucor has a projected earnings growth rate of 259.9% for the current year. The company’s shares have soared around 130% over the past year.
Cabot has an expected earnings growth rate of around 126% for the current fiscal year. The company’s shares have surged 60% in the past year.
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Image: Bigstock
Here's Why You Should Bet on Commercial Metals (CMC) Stock Now
Commercial Metals Company (CMC - Free Report) is gaining from forecast-beating third-quarter fiscal 2021 results as well as robust steel demand, driven by strong construction and infrastructure activities. Moreover, the company’s focus on price-rise actions and financial strength position it as an attractive investment option.
The company currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let's delve deeper into the factors that make the Commercial Metals stock a compelling investment option at the moment.
Earnings & Sales Top Estimates in Q3
Commercial Metals’ third-quarter fiscal 2021 adjusted earnings per share came in at $1.04, beating the Zacks Consensus Estimate of 81 cents. The bottom-line figure surged 76.2% year on year on robust demand for the company’s products. Net sales of $1,845 million also surpassed the consensus mark of $1,719 million and increased 37.5% year over year.
Positive Earnings Surprise Trend
The company has a trailing four-quarter average earnings surprise of 17.5%. Over the past five years, the company has generated earnings growth of 22.3%.
Impressive Price Performance
The company’s shares have gained 50.2% so far this year, outperforming the industry’s growth of 43.2%.
Upbeat Growth Projections
The Zacks Consensus Estimate for fiscal 2021 earnings per share is currently pegged at $2.85, indicating growth of 7.9% from the prior year. The same has moved up 6.7% over the past 30 days.
Solid Financial Position
Commercial Metals’ solid liquidity, financial position and focus on reducing debt will stoke growth. The company had a credit capacity of $639 million at the end of the fiscal third quarter, with cash in hand of $443 million. During third-quarter fiscal 2021, the company increased the revolving credit facility to $400 million from $350 million. Also, its net debt to trailing 12-month adjusted EBITDA ratio stood at 1.0 at the end of the fiscal third quarter, while net debt to capitalization is just 20%.
Other Growth Drivers
Commercial Metals continues to witness stellar demand for steel products across most of its end markets. Strong recovery in industrial activities in the United States is driving demand for merchant products, while solid demand from industrial customers in Central Europe is translating into robust demand for merchant bar and wire rod products. Meanwhile, elevated spending in the residential and highway infrastructure activities are spurring strong rebar demand in the United States and Europe. In fact, solid bidding and construction backlog will provide strength in the near term. These factors will likely support robust finished steel shipment levels in North America and Europe during the fiscal fourth quarter and the subsequent quarters as well.
Commercial Metals continues to gain from its ongoing network optimization efforts, which will yield additional margin and reduce costs in the near future. Apart from this, Commercial Metals is progressing well with construction of a third micro mill in Arizona, which will be the world's first mill to produce merchant bar quality (MBQ) steel products.
Moreover, the company is implementing price rise across its mill products in response to the rapidly-rising scrap costs. Management anticipates that its capacity-curtailment initiative at the West Coast fabrication facility to support the company’s network-optimization efforts will provide cost benefits in the days to come. This January, the company closed its Steel California operations and transitioned the supply chain for the California market to lower-cost material produced in the Central and East regions.
Other Stocks to Consider
Other top-ranked stocks in the basic materials space include Univar Solutions Inc. , Nucor Corporation (NUE - Free Report) and Cabot Corporation (CBT - Free Report) , each sporting a Zacks Rank #1, at present.
Univar has a projected earnings growth rate of 35.2% for 2021. The company’s shares have rallied around 53% in a year’s time.
Nucor has a projected earnings growth rate of 259.9% for the current year. The company’s shares have soared around 130% over the past year.
Cabot has an expected earnings growth rate of around 126% for the current fiscal year. The company’s shares have surged 60% in the past year.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>