Analysts rate Commercial Metals Company (CMC:NYE) with a Strong Buy and a $45.50 target

STA Research
by: STA Research
Commercial Metals Company

KeyBanc maintains Commercial Metals overweight rating, targets down from $49 to $45

Based on the Commercial Metals Company stock forecast from 6 analysts, the average analyst target price for CMC stock is USD 45.50 over the next 12 months. Commercial Metals Company’s average analyst rating is Strong Buy. Stock Target Advisor’s own stock analysis of CMC stock is Slightly Bearish, which is based on 5 positive signals and 11 negative signals. At the last closing, Commercial Metals Company’s stock price was USD 43.59. Commercial Metals Company’s stock price has changed by +0.28% over the past week, +7.05% over the past month and +33.18% over the last year.

About Commercial Metals Company (CMC:NYE)

In the United States, Poland, China, and globally, Commercial Metals Company manufactures, recycles, and fabricates steel and metal goods as well as associated products and services. To steel mills and foundries, aluminum sheet and ingot producers, brass and bronze ingot producers, copper refineries and mills, secondary lead smelters, specialty steel mills, high-temperature alloy producers, and other clients, the company processes and sells ferrous and nonferrous scrap metals. Along with semi-finished billets for re-rolling and forging uses, it also produces and markets finished long steel products, such as rebar, merchant bar, light structural, and other specific sections. Additionally, the company sells and rents construction-related products and equipment to concrete installers and other businesses, manufactures and sells strength bars for the truck trailer industry, special bar steels for the dam industry, and provides fabricated steel products used to reinforce concrete primarily in the construction of commercial and non-commercial buildings, hospitals, convention centres, industrial plants, power plants, highways, bridges, arenas, stadiums, and dams. Additionally, it produces merchant bars, wire rods, and rebars. It also distributes fabricated rebars, wire mesh, fabricated mesh, integrated rebar cages, and other fabricated rebar by-products to fabricators, manufacturers, distributors, and construction firms. Irving, Texas serves as the company’s headquarters. It was established in 1915.

 

What we like:

Superior risk adjusted returns

CMC stock has performed well, on a risk adjusted basis, compared to its sector peers (for a hold period of at least 12 months) and is in the top quartile.

Low volatility

The stock’s annual returns have been stable and consistent compared to its sector peers (for a hold period of at least 12 months) and are in the top quartile. Although stability is good, also keep in mind it can limit returns.

Superior return on equity

The company management has delivered a better return on equity in the most recent 4 quarters than its peers, placing it in the top quartile.

Positive cash flow

The company had positive total cash flow in the most recent four quarters.

Positive free cash flow

The company had positive total free cash flow in the most recent four quarters.

 

What we don’t like:

Low market capitalization

This is among the smaller entities in its sectors with below median market capitalization. That may make it less stable in the long run unless it has a unique technology or market which can help it grow or get acquired in future.

Below median dividend returns

The company’s average income yield over the past 5 years has been low compared to its peers. However, it is not a problem if you are not looking for income.

Overpriced compared to earnings

CMC stock is trading high compared to its peers on a price-to-earnings basis and is above the sector median.

Overpriced compared to book value

The stock is trading high compared to its peers median on a price-to-book value basis.

Overpriced on a cash flow basis

The stock is trading high compared to its peers on a price-to-cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering buying.

Poor capital utilization

The company management has delivered below the median return on invested capital in the most recent 4 quarters compared to its peers.

Poor return on assets

The company management has delivered below median return on assets in the most recent 4 quarters compared to its peers.

Highly leveraged

The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.

Low Earnings Growth

CMC stock has shown below median earnings growth in the previous 5 years compared to its sector

Low Revenue Growth

This stock has shown below median revenue growth in the previous 5 years compared to its sector

Low Dividend Growth

CMC stock has shown below median dividend growth in the previous 5 years compared to its sector.

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