- Commercial Metals Company reported a solid FQ1, with $0.30 in earnings per share on net sales of $1.7 billion.
- The case for CMC looks even stronger, as demonstrated by the increase in revenue, higher cash reserves, utilization of its share buyback plan, and its ability to overcome challenges.
- However, concerns remain about how weak oil could hurt manufacturing, seasonal challenges that exist for Q2, and uncertainty remains about continued construction growth in the US.
- In spite of these challenges, CMC has demonstrated its ability to overcome problems, and its outlook looks even better for 2015.
Commercial Metals Company's Shares Fall Post Earnings, Should You Consider For Long-Term?Joey Solitro • Tue, Jan. 6
- Q1 2015 earnings were released on January 6.
- Earnings per share beat expectations, but revenue fell short.
- Sales increased in three of its five major segments.
- The stock has responded by falling over 5%.
- Commercial Metal Company is a vertically integrated global, low-cost metals recycling and manufacturing company.
- CMC's core business segments provide diversity and strength to its overall operations.
- CMC is a value buy because it has solid fundamentals, strong institutional investment, consistent revenues, and a recently announced $100 million share buyback plan.
- CMC faces several challenges, including the cyclical nature of its business, the broader economic environment, and supply/demand issues in China.
- My price target is $20 for CMC in 2015, which is a 25% increase from its current share price of $16.18.
Confident Commercial Metals Boosts Its Cash DividendTyler McKinna • Dec. 28, 2007
Fri, Jan. 23, 11:18 AM
- Iron ore miners are broadly lower after Goldman Sachs becomes the latest global bank to deliver a dismal outlook for the steel-making ingredient, forecasting an average price of $66/metric ton this year from an earlier estimate of $80.
- Goldman is at least the fifth bank this month to lower estimates, citing rising seaborne supplies and weaker demand growth from China; just last week, Citigroup cut its iron ore forecast to $58 in 2015, down from its earlier $65, and UBS lowered its target to $66 from $85.
- Low-cost expansions likely will continue as major producers are still mining iron ore at a profit, which would expand the global seaborne surplus from 47M tons this year to 260M tons by 2018, Goldman says.
- Iron ore miners: VALE -8%, BHP -3%, RIO -3.6%, CLF -7.6%.
- Copper miners: FCX -2.6%, SCCO -2.4%, TCK -2.6%.
- Steel companies: X -6.3%, MT -7.1%, AKS -3.2%, NUE -1.2%, STLD -3%, CMC -3.8%, TMST -2.4%.
- Earlier: Goldman gives in on mined commodities
Tue, Jan. 6, 8:28 AM
Tue, Jan. 6, 7:15 AM| Comment!
Mon, Jan. 5, 5:30 PM
Dec. 12, 2014, 2:54 PM
- Energy-related demand represents ~13% of U.S. steel sales, which Credit Suisse analysts say places most at risk US Steel’s (X -1.9%) tubular goods business, which produces OCTG products, and Commercial Metals' (CMC -3%) steel mills business, which has a significant exposure to Texas and other oil-rich regions.
- The firm also says North American iron ore producers such as Cliffs Natural Resources (CLF -3.4%) have higher energy intensities than Australian and Brazilian producers at both the mine and on the sea, and the lower oil price in theory partially closes the gap between North American and Brazilian/Australian supply, but any gains would be short-lived.
Nov. 19, 2014, 12:26 PM
- Iron ore prices extend their historic decline, approaching $70/dry ton in a retreat to the lowest level in more than five years, as analysts rule out any Chinese restocking that typically supports prices towards the end of each year.
- The price is now at a level at which all but the three biggest low-cost producers - Rio Tinto (RIO -2.4%), BHP Billiton (BHP -3%) and Fortescue (OTCPK:FSUMF -8.8%) - are either generating losses or are struggling to break even.
- Steel stocks also are getting whacked: SCHN -5.4%, X -4%, PKX -3%, AKS -3%, CMC -2.7%, STLD -2.5%, NUE -1.6%, MT -1.3%.
Oct. 29, 2014, 7:14 AM| Comment!
Oct. 28, 2014, 5:30 PM
- ACCO, ADP, AIT, ALKS, ALLY, AMED, ARW, AUO, AVX, BAH, BDC, CCJ, CFR, CKSW, CMC, COT, CTCM, DXYN, ETN, EVER, EXC, GHM, GRMN, GT, H, HES, HSY, IACI, ISSI, JLL, LFUS, MHFI, MRGE, MTH, NVMI, OMG, PAG, PB, PSX, PSXP, PX, RES, RL, ROL, RYAM, SEE, SKYW, SO, SODA, SPW, SPWR, STM, TEL, TFX, UAM, UBSI, VLY, WEC, WLP, WM, XRAY
Oct. 21, 2014, 12:34 PM
- The U.S. says it will terminate a 15-year-old deal sheltering Russian flat-rolled steel producers from high import duties, and anti-dumping duties will apply beginning Dec. 16.
- U.S. steel producers, including U.S. Steel (X +5%) and Nucor (NUE +2.2%), complained to the Commerce Department in July that the reference price set in a 1999 agreement, which also set a cap on imports, had been below U.S. market prices since 2004.
- However, J.P. Morgan analysts see no reason for buying steel stocks (NYSEARCA:SLX), saying the move impacts only 1.4% of U.S. market share; in fact, the firm suggests shorting steel stocks on the "misinterpretation" of duties on Russian imports of hot rolled steel.
- Other steels also are higher: AKS +3.9%, MT +3.6%, CMC +2.3%, STLD +1.7%.
Sep. 10, 2014, 2:34 PM
- The U.S. Commerce Department has announced that Turkey has not been dumping rebar and will not impose duties on it, and Axiom Capital thinks it is bad news for U.S. Steel (X -0.7%).
- Axiom says it is difficult to imagine U.S. steel mills successfully arguing that dumping is occurring against the current macro backdrop when U.S. HRC spot prices are sitting at a $93, $63 and $18 premium to Chinese, EU and Turkey HRC spot prices.
- The firm continues to believe the rally in U.S. Steel is based several misconceptions by the market (earlier).
- A group of five U.S.-based steel producers, including Nucor (NUE -0.9%) and Commercial Metals (CMC -2%), sued last year, accusing Turkey and Mexico of essentially undercutting U.S. prices to grab sales and market share; the U.S. confirmed duties on Mexican material of up to 66.7%.
Sep. 3, 2014, 12:36 PM
- U.S. Steel (X +2.7%) remains solidly higher on the day after Morgan Stanley named it a top pick, and is now up by a third YTD; most steel peers also are higher, with MT +2.7%, STLD +2.5%, NUE +2.2%, CMC +2.2%, but AKS -4.8% after guiding Q3 earnings below consensus.
- Axiom Capital’s Gordon Johnson admits he’s been wrong on U.S. Steel this year, but he stands by his bearish call, noting that what really got the stock going was guidance for Q3 pointing to ~$1/share in GAAP EPS.
- Johnson thinks the optimism is not realistic and sees 10%-15% downside to U.S. HRC spot prices as likely before year-end 2014 and noting the inherent volatility in the company's earnings to shifts in U.S. HRC spot prices, elevated by resiliency in U.S. HRC spot prices (-1.2% YTD), despite the fall in both iron ore (-35% YTD) and coking coal prices (-21% YTD).
Sep. 3, 2014, 9:13 AM
- U.S. Steel (NYSE:X) +2.7% premarket as Morgan Stanley upgrades its view on the steel sector to Attractive while raising its price target for X, the firm's top pick in the sector, to $60 from $35 with a bull case for $87.
- Stanley sees the steel industry benefiting from both structural and cyclical improvements, and likes U.S. Steel's compelling company-specific cost-cutting initiative; the firm also thinks X is getting ready to walk away from its loss-making Canadian operations.
- Shares also may be getting a lift because of its exposure to favorable headlines out of eastern Europe: US Steel Europe, representing 17% of overall revenue, includes a steel plant and coke production facilities in Slovakia.
- ArcelorMittal (NYSE:MT), with a strong presence in the area, also +2.7%; the other U.S. steel producers - AKS, CMC, NUE, STLD - have less exposure to the region and are little changed premarket.
Jun. 27, 2014, 7:20 AM
Jun. 27, 2014, 7:04 AM| Comment!
Jun. 26, 2014, 5:30 PM
Jun. 4, 2014, 2:39 PM
- A bullish outlook on steel released in Japan by Credit Suisse could be moving sector stocks in the U.S., Barron's Ben Levisohn writes, even though conditions for the U.S. industry don't look especially promising.
- U.S. Steel (X +3.9%) is enjoying its biggest one-day percentage gain since Dec. 23; some sources cite news of its idling two plants in Texas and Pennsylvania that produce tubular products for the oil and gas industries, but that was announced two days ago.
- Suggesting investors tread lightly on steel stocks, Wells Fargo analysts expect steel imports to remain at elevated levels as domestic vs. international price spreads are more than $100/ton across all flat and long products; imports typically increase when U.S. pricing is at a greater than $100 premium.
- Also: AKS +3.4%, SCHN +1.7%, CMC +0.8%, STLD +0.3%, NUE -0.2%.
CMC vs. ETF Alternatives
Commercial Metals Co recycles, manufactures, fabricates and distributes steel and metal products and related materials and services through a network of locations throughout the United States and internationally.
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