Earnings Preview: Commercial Metals Company

| About: Commercial Metals (CMC)

Commercial Metals Company (NYSE:CMC) engages in recycling, manufacturing, fabricating, and distributing steel and metal products, and related materials and services in the United States and internationally. The company processes scrap metals for use as a raw material by manufacturers of new metal products through 33 scrap metal processing facilities 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 is scheduled to report its Q3 2012 results on June 27, 2012, before the market opens.

Technical Overview

Key Metrics
  • Market Cap: 1.42B
  • 52-week trading range: 8.64 - 16.48
  • Trailing P/E: 27.25
  • Forward P/E: 6.94
  • Price/Sales: 0.17
  • Price/Book: 1.14
  • PEG Ratio: 1.58
  • Total Debt: 1.39B
  • Annual dividend yield: 3.90%
  • Return on Equity: 3.44%
  • Return on Assets: 3.19%

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last four quarters. In the last quarter it reported $0.24 EPS, beating analyst estimates of $0.09.

The consensus EPS is $0.38 based on 11 analysts' estimates, up from $0.32 a year ago. Revenue estimates are $2.14B, up from $2.08B a year ago. The median target price by analysts for the stock is $16.00.

Average recommendation: Overweight

Source: Marketwatch

Latest Developments
  • On June 13, 2012, Commercial Metals Company announced today the completion of the sale to an undisclosed and unaffiliated third-party of the assets related to the welded pipe mill and seamless pipe mill of CMC's former Croatian Pipe Mill and wholly-owned subsidiary, CMC Sisak d.o.o., for a total consideration of U.S. $6,650,000.
  • On June 4, 2012, Commercial Metals Company announced the completion of the sale of Croatian Pipe Mill and wholly owned subsidiary, CMC Sisak, d.o.o. (CMC Sisak), pursuant to a definitive purchase agreement whereby CMC sold all of the outstanding shares of CMC Sisak to the Danieli Group - Steel Making Division by the Danieli holding company, Industrielle Beteiligung SA (Danieli).

Commercial Metals Company operates in Steel & Iron industry. The company could be compared to Nucor Corporation (NYSE:NUE), Schnitzer Steel Industries Inc. (NASDAQ:SCHN), Worthington Industries, Inc. (NYSE:WOR), and United States Steel Corp. (NYSE:X). Below is the table comparison of the most important ratios between these companies and the industry.

Below is the chart comparison with the stock price changes as a percentage for the selected companies and S&P 500 index for the last one year period.

CMC Chart

CMC data by YCharts

Competitors' Latest Development
  • On June 13, 2012, Nucor Corporation announced that for the second quarter of 2012, it expects results to be in the range of $0.35 to $0.40 per diluted share. These projected results include an expected impairment charge related to Duferdofin Nucor S.r.l.
  • On May 18, 2012, ArcelorMittal announced the sale of its steel foundation distribution business in NAFTA, namely Skyline Steel and Astralloy (Skyline Steel) to Nucor Corporation (Nucor) for a total consideration of approximately $605 million on a debt free and cash free basis (and subject to customary closing adjustments).
  • On April 30, 2012, Reliance Steel & Aluminum Co. announced that, through its wholly-owned subsidiary Precision Strip, Inc., it has completed the acquisition of the assets of the Worthington Steel Vonore plant, a processing facility owned by Worthington Industries, Inc.
  • On April 26, 2012, Worthington Industries, Inc. announced that Mark A. Russell will become the next President and Chief Operating Officer of the Company, effective August 1, 2012.
  • On April 19, 2012, Nucor Corporation announced that for the second quarter of 2012, it currently expect to see only a modest improvement in earnings.
  • On March 12, 2012, United States Steel Corp announced its intention to offer, subject to market and other conditions, $400 million aggregate principal amount of senior unsecured notes due 2022.
  • On February 15, 2012, Nucor Corporation announced that the Board of Directors has declared the regular quarterly cash dividend of $0.365 per share on Nucor's common stock. This cash dividend is payable on May 11, 2012 to stockholders of record on March 30, 2012.
  • On January 31, 2012, United States Steel Corp announced that for the first quarter of 2013, it expects to report a significant improvement in the operating results as compared to the fourth quarter, mainly driven by improved average realized prices and shipments for the Flat-rolled segment.
  • On January 30, 2012, United States Steel Corp announced a plan for the sale of U. S. Steel Serbia d.o.o. to the Republic of Serbia for a nominal purchase price, subject to finalization and execution of definitive agreements.
  • On January 26, 2012, Nucor Corporation announced that it expect earnings in the first quarter of 2012 to be improved from fourth quarter 2011 levels, after adjusting for one-time benefits received in the fourth quarter.
  • On January 5, 2012, Nucor Corporation announced that it will exit the business of fabricating light gauge steel framing and therefore will close its Nuconsteel division. Nuconsteel has operations in Denton, Texas, and Dallas, Georgia.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Tagged: , Steel & Iron, Earnings
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