Monday saw KeyBanc Capital Markets maintaining its Sector Weight rating for Commercial Metals Company (NYSE:CMC) stock. The reiteration comes as the firm anticipates Commercial Metals' earnings release on January 6, 2025. KeyBanc analyst Philip Gibbs adjusted the company's first-quarter earnings per share (EPS) estimate for 2025 downward, citing recent challenges in steel mill price-cost dynamics.
This adjustment aligns with InvestingPro data showing three analysts recently revising their earnings estimates downward, while the stock trades at a P/E ratio of 11.8x. Despite this revision, the analyst confirmed that the full-year EPS forecast for 2025 remains unchanged.
Gibbs highlighted that the current rating is based on the belief that Commercial Metals' shares are appropriately valued given the fiscal year 2025 outlook, though InvestingPro's Fair Value analysis suggests the stock may be slightly undervalued. The company's mid-to-long-term prospects are seen as favorable, particularly as a potential beneficiary of the U.S. infrastructure bill and its investments in low-cost capacity expansion.
With a strong financial health score and the ability to maintain dividend payments for 54 consecutive years, the company appears well-positioned for long-term growth. However, Gibbs also noted some concerns that temper this outlook, including a less vigorous infrastructure momentum compared to initial projections, mixed sentiment in the private sector, and the expected increase in new U.S. rebar capacity over the coming years.
Commercial Metals Company, which specializes in steel and metal products, is preparing for its first-quarter earnings report for 2025, set to be disclosed to the public on January 6. The firm's performance is particularly significant given its role in the supply chain for infrastructure projects and the construction industry, sectors that are closely watched for economic indicators.
Currently trading near its 52-week low of $47.42, the stock's RSI indicates oversold conditions, according to InvestingPro, which offers 12 additional valuable insights about CMC's current market position in its comprehensive Pro Research Report.
Investors and stakeholders in Commercial Metals Company are looking ahead to the earnings release to gauge the company's financial health and performance amidst the described industry challenges. The company's stock performance following the release of the earnings report will be an indicator of market sentiment regarding its ability to navigate the current industry dynamics.
The steel industry, and by extension Commercial Metals Company, is at a crossroads, with the potential for growth through infrastructure projects and organic investments. However, the industry also faces headwinds due to changing market conditions and increased competition. KeyBanc's assessment provides a snapshot of the company's position as it approaches its quarterly financial disclosure.
In other recent news, Commercial Metals Company (CMC) has released its earnings results, showing a core EBITDA of $1 billion for fiscal 2024, a decrease from $1.4 billion in fiscal 2023. However, the company generated $900 million in cash flow from operations and returned $261.8 million to shareholders, a 48% increase from the previous fiscal year.
In terms of company developments, CMC has extended the maturity of its $600 million revolving credit facility from 2027 to 2029, providing the company with continued financial flexibility.
Morgan Stanley (NYSE:MS) has maintained an Equalweight rating on CMC shares, expressing a neutral stance on the company's shares at the current price level. BMO Capital also retained a Market Perform rating, predicting a softer earnings performance in the upcoming quarters but expecting a recovery in earnings for the second half of fiscal 2025.
On the project front, CMC's Arizona 2 micro mill is projected to reach operational breakeven in Q1 2025, and the Steel West Virginia project is on track for commissioning in late 2025.
Despite a projected decline in consolidated financial results for Q1 2025 due to temporary softness in the construction industry, CMC anticipates improved market conditions in the second half of fiscal 2025. The company plans to continue investing in its future with a projected capital expenditure of $630-$680 million for fiscal 2025.
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